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EXHIBIT 4.2  

 
 

WARRANT AGREEMENT    
  

by and between 

THE IMMUNE RESPONSE CORPORATION  

and 

COMPUTERSHARE TRUST COMPANY, INC.  

as Warrant Agent 

Dated as of December 10, 2002 

 
 
 

TABLE OF CONTENTS    
  

	

Article I CERTAIN DEFINITIONS	
 	

1
	 	

Section 1.01	
 	

Definitions	
 	

1
	

Article II ORIGINAL ISSUE OF WARRANTS	
 	

5
	 	

Section 2.01	
 	

Form of Warrant Certificates	
 	

5
	 	Section 2.02	 	Restrictive Legends	 	5
	 	Section 2.03	 	Execution and Delivery of Warrant Certificates	 	5
	 	Section 2.04	 	Loss or Mutilation	 	6
	 	Section 2.05	 	CUSIP Numbers	 	6
	 	Section 2.06	 	Certificated Warrants	 	6
	

Article III EXERCISE OF WARRANTS; REDEMPTION	
 	

7
	 	

Section 3.01	
 	

Exercise of Class A Warrants	
 	

7
	 	Section 3.02	 	Exercise of Class B Warrants	 	7
	 	Section 3.03	 	Redemption	 	7
	 	Section 3.04	 	Exercise; Restrictions on Exercise	 	8
	 	Section 3.05	 	Method of Exercise	 	8
	 	Section 3.06	 	Issuance of Warrant Shares	 	9
	 	Section 3.07	 	Fractional Warrant Shares	 	9
	 	Section 3.08	 	Reservation of Warrant Shares	 	9
	 	Section 3.09	 	Compliance with Law	 	10
	

Article IV ANTIDILUTION PROVISIONS	
 	

10
	 	

Section 4.01	
 	

Changes in Common Stock	
 	

10
	 	Section 4.02	 	Cash Dividends and Other Distributions	 	11
	 	Section 4.03	 	Issuance of Common Stock or Rights or Options	 	11
	 	Section 4.04	 	Fundamental Transaction; Liquidation	 	12
	 	Section 4.05	 	Other Dilutive Events	 	13
	 	Section 4.06	 	Superseding Adjustment	 	13
	 	Section 4.07	 	Minimum Adjustment	 	13
	 	Section 4.08	 	Notice of Adjustment	 	14
	 	Section 4.09	 	Notice of Certain Transactions	 	14
	 	Section 4.10	 	Adjustment to Warrant Certificate	 	15
	

Article V WARRANT TRANSFER BOOKS; RESTRICTIONS ON TRANSFER	
 	

15
	 	

Section 5.01	
 	

Transfer and Exchange	
 	

15
	 	Section 5.02	 	Registration; Registration of Transfer and Exchange	 	15
	 	Section 5.03	 	Initial Certificated Warrants; Book-Entry Provisions for the Global Warrants	 	16
	 	Section 5.04	 	Surrender of Warrant Certificates	 	17
	

Article VI THE WARRANT AGENT	
 	

17
	 	

Section 6.01	
 	

Duties and Liabilities	
 	

17
	 	Section 6.02	 	Right To Consult Counsel	 	19
	 	Section 6.03	 	Compensation; Indemnification	 	19
	 	Section 6.04	 	No Restrictions on Actions	 	19
	 	Section 6.05	 	Discharge or Removal; Replacement Warrant Agent	 	20
	 	Section 6.06	 	Successor Warrant Agent	 	20

i

 

	

Article VII WARRANT HOLDERS	
 	

21
	 	

Section 7.01	
 	

Warrant Holder Not Deemed a Holder of Common Stock	
 	

21
	 	Section 7.02	 	Right of Action	 	21
	

Article VIII MISCELLANEOUS	
 	

21
	 	

Section 8.01	
 	

Payment of Taxes	
 	

21
	 	Section 8.02	 	Reports to Holders	 	21
	 	Section 8.03	 	Notices	 	21
	 	Section 8.04	 	Severability	 	22
	 	Section 8.05	 	Binding Effect	 	22
	 	Section 8.06	 	Third-Party Beneficiaries	 	22
	 	Section 8.07	 	Amendments	 	22
	 	Section 8.08	 	Headings	 	22
	 	Section 8.09	 	GOVERNING LAW	 	22
	 	Section 8.10	 	Counterparts	 	22
	

EXHIBIT A-1	
 	

Form of Class A Warrant Certificate
	EXHIBIT A-2	 	Form of Class B Warrant Certificate
	EXHIBIT B	 	Form of Legend for Global Warrants
	EXHIBIT C	 	Form of Legend for Warrant Certificates
	EXHIBIT D	 	Form of Accredited Investor Certificate Transferee Letter of Representation

ii

  

 
 

WARRANT AGREEMENT

        WARRANT
AGREEMENT (this "Agreement"), dated as of December 10, 2002, by and between THE IMMUNE RESPONSE CORPORATION, a Delaware
corporation (the "Company"), and COMPUTERSHARE TRUST COMPANY, INC., a Colorado corporation, as Warrant Agent (the
"Warrant Agent"). 

W I T N E S S E T H:

        WHEREAS,
the Company proposes to issue two classes of warrants (collectively, the "Warrants") to purchase upon the exercise of such
warrants up to an aggregate 21,948,980 shares of common stock, par value $0.0025 per share, of the Company (the "Common Stock"); 

        WHEREAS,
the Warrants are being issued in connection with the offering by the Company of up to eighty (80) units (plus up to an additional twenty four (24) units to cover
any over subscriptions) (each a "Unit" and collectively, the "Units"), each Unit consisting of
(a) shares of Common Stock and (b) Class A Warrants (the "Class A Warrants") to purchase initially (i) one share of
Common Stock and (ii) one Class B Warrant (the "Class B Warrants") to purchase initially one (1) share of Common Stock (the
"Offering"); and 

        WHEREAS,
the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act in connection with the issuance of Warrant Certificates (as
herein defined) and other matters as set forth in this Agreement; 

        NOW,
THEREFORE, in consideration of the foregoing and for the purpose of defining the terms and provisions of the Warrants and the respective rights and obligations thereunder of the
Company and the Warrant Agent, the Company and the Warrant Agent each hereby agree for the benefit of the other party and for the equal and ratable benefit of the holders of Warrants (the
"Holders") as follows: 

 
 

ARTICLE I
  
    CERTAIN DEFINITIONS

        Section 1.01    Definitions.    (a) As used in this Agreement, the following terms shall have the
following meanings: 

        "Affiliate" means, with respect to any specified Person, (i) any other Person directly or indirectly controlling or controlled by
or under direct or indirect common control with such specified Person or (2) any other Person that owns, directly or indirectly, twenty five percent (25%) or more of such specified Person's
Voting Stock or any executive officer or director of any such specified Person or other Person or, with respect to any natural Person, any Person having a relationship with such Person by blood,
marriage or adoption not more remote than first cousin. For the purposes of this definition, "control," when used with respect to any specified Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to
the foregoing. 

        "Board of Directors" means the Board of Directors of the Company or any committee thereof duly authorized to act on behalf of such Board
of Directors. 

        "Business Day" means any day which is not a Saturday, a Sunday, or any other day on which banking institutions in New York City are not
required to be open. 

        "By-laws" means the by-laws of the Company, as the same may be amended or restated from time to time. 

1

 

        "Capital Stock" of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock. 

        "Closing Price" means eighty percent (80%) of the lesser of (i) the average of the closing bid prices of the Common Stock, as
quoted on the National Association of Securities Dealers Automated Quotation
System, for the ten (10) consecutive trading days immediately preceding the closing date of the Offering and (ii) the closing bid price of the Common Stock on the date immediately
preceding the closing date of the Offering. 

        "Commission" means the United States Securities and Exchange Commission. 

        "Company Request" or "Company Order" means a written request or order signed in the name
of the Company by its Chairman, its Chief Executive Officer, its President, any Vice President, its Treasurer or an Assistant Treasurer, and delivered to the Warrant Agent. 

        "Current Market Value" per share of Common Stock of the Company or any other security at any date means (i) if the security is not
registered under the Exchange Act, (A) the value of the security, determined in good faith by the Board of Directors and certified in a board resolution, based on the most recently completed
arm's-length transaction between the Company and a Person other than an Affiliate of the Company and the closing of which occurs on such date or shall have occurred within the six-month
period preceding such date, or (B) if no such transaction shall have occurred on such date or within such six-month period, the fair market value of the security as determined by a
nationally or regionally recognized independent financial expert (provided that, in the case of the calculation of Current Market Value for determining the cash value of fractional shares, any such
determination within six months that is, in the good faith judgment of the Board of Directors, a reasonable determination of value, may be utilized) or (ii) if the security is registered under
the Exchange Act, (a) the average of the daily closing sales prices of the securities for the twenty (20) consecutive trading days immediately preceding such date, or (b) if the
securities have been registered under the Exchange Act for less than twenty (20) consecutive trading days before such date, then the average of the daily closing sales prices for all of the
trading days before such date for which closing sales prices are available, in the case of each of (ii)(a) and (ii)(b), as certified to the Warrant Agent by the President, any Vice President or the
Chief Financial Officer of the Company. The closing sales price for each such trading day shall be: (1) in the case of a security listed or admitted to trading on any United States national
securities exchange or quotation system, the closing sales price, regular way, on such day, or if no sale takes place on such day, the average of the closing bid and asked prices on such day;
(2) in the case of a security not then listed or admitted to trading on any national securities exchange or quotation system, the last reported sale price on such day, or if no sale takes place
on such day, the average of the closing bid and asked prices on such day, as reported by a reputable quotation source designated by the Company; (3) in the case of a security not then listed or
admitted to trading on any national securities exchange or quotation system and as to which no such reported sale price or bid and asked prices are available, the average of the reported high bid and
low asked prices on such day, as reported by a reputable quotation service, or a newspaper of general circulation in the Borough of Manhattan, City and State of New York, customarily published on each
Business Day, designated by the Company, or if there shall be no bid and asked prices on such day, the average of the high bid and low asked prices, as so reported, on the most recent day (not more
than thirty (30) days prior to the date in question) for which prices have been so reported; and (4) if there are not bid and asked prices reported during the thirty (30) days
prior to the date in question, the Current Market Value shall be determined as if the securities were not registered under the Exchange Act. 

        "DTC" means The Depository Trust Company, its nominees and their respective successors. 

2

 

        "Exchange Act" means the United States Securities Exchange Act of 1934, as amended. 

        "Exercise Date" means, with respect to any Warrant, the Business Day on which such Warrant is exercised in accordance with
Article III of this Agreement. 

        "Exercise Price" means the applicable exercise price with respect to a Warrant determined in accordance with Section 3.01 or
Section 3.02, as applicable, in each case subject to adjustment pursuant to the terms of this Agreement. 

        "Expiration Date" of any Warrant means the fifth (5th) anniversary of the Issue Date for such Warrant which, if not a Business Day, shall
be the next Business Day. 

        "Form S-1 Registration Statement" means the registration statement on Form S-1 contemplated by
Section 5 of the Purchase Agreements relating to the offer and sale by the Company to the Holders of the Warrants (other than the Investors) of (i) the Warrants Shares acquired by such
Holders upon the exercise of any Warrants and (ii) the Class B Warrants acquired by such Holders upon the exercise of any Class A Warrants. 

        "Form S-3 Registration Statement" means the registration statement on Form S-3 contemplated by
Section 5 of the Purchase Agreements relating to the resale by the Investors of the Common Stock (included in the Units), the Warrants and the Warrant Shares acquired by the Investors upon the
exercise of any Warrant. 

        "Fundamental Transaction" means any transaction or series of related transactions by which the Company consolidates with or merges with or
into any other Person or sells, assigns, transfers, leases, conveys or otherwise disposes of all or substantially all of its properties and assets to another Person or group of affiliated Persons or
is a party to a merger or binding share exchange which reclassifies or changes its outstanding Common Stock; provided, however, that the Company may
effect any of such transactions with a wholly-owned subsidiary where after such transaction the Company or, in the event the Company is not the surviving entity, the surviving entity has a
consolidated net worth which is no less than the consolidated net worth of the Company prior to such transaction. 

        "Investors" means the initial purchasers of the Units offered by the Company pursuant to the Purchase Agreements, dated as of
December     , 2002, by and between the Company and the Persons identified therein (the "Purchase Agreements"). 

        "Issue Date" means (i) with respect to the Class A Warrants (other than the Class A Warrants comprising a part of the
Unit Purchase Option), the closing date of the Offering, (ii) with respect to the Class A Warrants comprising a part of the Unit Purchase Option, the date of exercise of the Unit
Purchase Option and (iii) with respect to the Class B Warrants, the date of exercise of the applicable Class A Warrant. 

        "Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political subdivision thereof. 

        "Placement Agent" means Spencer Trask Ventures, Inc., a Delaware corporation, as exclusive placement agent in connection with the
Offering. 

        "Preferred Stock" as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends or distributions, and/or as to the payment of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock
of any other class of such Person. 

3

 

        "Registration Statements" means the collective reference to the Form S-1 Registration Statement and the
Form S-3 Registration Statement and any amendments or supplements thereto. 

        "Securities" means the Warrants and the Warrant Shares. 

        "Securities Act" means the United States Securities Act of 1933, as amended. 

        "Unit Purchase Option" means the option issued by the Company to the Placement Agent, in consideration for acting as such, to purchase
from the Company at any time during the period commencing on the date hereof and ending at 5:30 p.m., New York time, on the seventh (7th) year anniversary of the closing date of
the Offering, that number of Units equal to twenty percent (20%) of the number of Units sold in the Offering. 

        "Voting Stock" means, with respect to any Person, any class or classes of Capital Stock pursuant to which the holders thereof have the
general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers or trustees of such Person (irrespective of whether or not, at the time, stock of any
other class or classes shall have, or might have, voting power by reason of the happening of any contingency). 

        "Warrant Shares" mean the shares of Common Stock or any other securities for which the Warrants are exercisable or which have been issued
upon exercise of the Warrants. 

	(b)
	Each
of the following terms is defined in the Section set forth opposite such term: 

	Term
	 	Section

	Agent Members	 	5.03(a)
	Agreement	 	Forepart
	Certificated Warrants	 	2.03
	Class A Warrants	 	Recitals
	Class B Warrants	 	Recitals
	Common Stock	 	Recitals
	Company	 	Forepart
	Global Warrant	 	2.03
	Holders	 	Recitals
	Investors	 	1.01
	Purchase Agreements	 	1.01
	Redemption Notice Date	 	3.03
	Redemption Price	 	3.03
	Redemption Target Price	 	3.03
	Stock Transfer Agent	 	3.06
	Successor Company	 	4.04(a)
	Supplemental Warrant Agreement	 	4.04(a)
	Transaction Date	 	4.03
	Units	 	Recitals
	Warrants	 	Recitals
	Warrant Agent	 	Forepart
	Warrant Certificates	 	2.01
	Warrant Register	 	5.01

4

 
 
 

ARTICLE II
  
    ORIGINAL ISSUE OF WARRANTS

        Section 2.01    Form of Warrant Certificates.    Certificates representing the Class A Warrants and the
Class B Warrants (collectively, the "Warrant Certificates") shall be in registered form only and substantially in the form attached hereto as  Exhibit A-1
and Exhibit A-2, respectively. The Warrant
Certificates shall be dated the date on which they are countersigned by the Warrant Agent and shall have such insertions as are appropriate or required or permitted by this Agreement and may have such
letters, numbers or other marks of identification and such legends and endorsements typed, stamped, printed, lithographed or engraved thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to comply with any law or with any rule or regulation pursuant thereto, or to conform to usage. 

        The
terms and provisions contained in the form of Warrant Certificate annexed hereto as Exhibit A shall constitute, and are hereby
expressly made, a part of this Agreement. 

        The
definitive Warrant Certificates shall be typed, printed, lithographed or engraved or produced by any combination of these methods, all as determined by the officer of the Company
executing such Warrant Certificates, as evidenced by such officer's execution of such Warrant Certificates. 

        Pending
the preparation of definitive Warrant Certificates, temporary Warrant Certificates may be issued, which may be printed, lithographed, typewritten, mimeographed or otherwise
produced, and which will be substantially of the tenor of the definitive Warrant Certificates in lieu of which they are issued. 

        If
temporary Warrant Certificates are issued, the Company will cause definitive Warrant Certificates to be prepared without unreasonable delay. After the preparation of definitive
Warrant Certificates, the temporary Warrant Certificates shall be exchangeable for definitive Warrant Certificates upon surrender to the Warrant Agent of the temporary Warrant Certificates without
charge to the Holder. Until so exchanged the temporary Warrant Certificates shall in all respects be entitled to the same benefits under this Agreement as definitive Warrant Certificates. 

        Section 2.02    Restrictive Legends.    (a) Each Global Warrant shall bear on the face thereof the
legend set forth in Exhibit B. 

	(b)
	Except
as provided in Section 2.02(c) and Section 2.02(d), each Warrant Certificate shall bear on the face thereof the legends set forth on  Exhibit C.

	(c)
	The
legend contemplated by Paragraph A of Exhibit C may be removed upon the earliest to occur of (i) the transfer
of the Warrant evidenced thereby pursuant to a registration statement which has been declared effective under the Securities Act and which continues to be effective at the time of such transfer,
(ii) the sale of the Warrant pursuant to Rule 144 promulgated under the Securities Act (or any similar provision of the Securities Act then in effect) and (iii) when the Warrant
may be resold without registration under the Securities Act pursuant to Rule 144(k) or otherwise.

	(d)
	The
legend contemplated by Paragraph B of Exhibit C may be removed upon the continuing effectiveness under the Securities
Act of the Form S-1 Registration Statement. 

        Section 2.03    Execution and Delivery of Warrant Certificates.    Warrant Certificates evidencing
(a) the Class A Warrants to purchase initially an aggregate of 10,974,490 shares of Common Stock and (b) the Class B Warrants to purchase initially an aggregate of
10,974,490 shares of Common Stock shall in each case be executed by the Company on the applicable Issue Date and delivered to the Warrant Agent for countersignature, and the Warrant Agent shall
thereupon countersign such Warrant Certificates and deliver to the Holders Warrant Certificates representing the Class A Warrants or Class B Warrants, as the case may be. The Warrant
Agent is hereby authorized to countersign and 

5

 

deliver Warrant Certificates as required by this Section 2.03 or by Section 2.04, 2.06, 3.03 or 5.03 of this Agreement. 

        The
Warrant Certificates shall be executed on behalf of the Company by its Chief Executive Officer, President or any Vice President, either manually or by facsimile signature printed
thereon. The Warrant Certificates shall be countersigned manually by the Warrant Agent and shall not be valid for any purpose unless so countersigned. In case any officer of the Company whose
signature shall have been placed upon any of the Warrant Certificates shall cease to be such officer of the Company before countersignature by the Warrant Agent and issuance and delivery thereof, such
Warrant Certificates may, nevertheless, be countersigned by the Warrant Agent and issued and delivered with the same force and effect as though such person had not ceased to be such officer of the
Company. 

        Initially,
the Warrants shall be issued in definitive, fully registered form substantially in the form set forth in Exhibit A  ("Certificated Warrants"). To the
extent provided in Section 5.03(a), the Warrants may be deposited in the form of book
entry (each a "Global Warrant") with the Warrant Agent (subject to the provisions of Section 5.02), which shall act as custodian for DTC, duly executed by the Company and countersigned by the
Warrant Agent as hereinafter provided. The number of Warrants represented by the Global Warrant may from time to time be increased or decreased by adjustments made on the records of the Warrant Agent
and DTC as hereinafter provided. Pursuant to Section 5.03, interests in the Global Warrant may be converted into or exchanged for Certificated Warrants. 

        Section 2.04    Loss or Mutilation.    Upon receipt by the Company and the Warrant Agent of evidence
satisfactory to them, in their reasonable discretion, of the ownership and the loss, theft, destruction or mutilation of any Warrant Certificate and of indemnity satisfactory to them and (in the case
of mutilation) upon surrender and cancellation thereof, then, in the absence of notice to the Company or the Warrant Agent that the Warrants represented thereby have been acquired by a bona fide
purchaser, the Company shall execute and the Warrant Agent shall countersign and deliver to the registered Holder of the lost, stolen, destroyed or mutilated Warrant Certificate, in exchange for or in
lieu thereof, a new Warrant Certificate of the same tenor and for a like aggregate number of Warrants. Upon the issuance of any new Warrant Certificate under this Section 2.04, the Company may
require the payment of a sum sufficient to cover any tax and other costs of the Replacement Warrant, including the cost of obtaining a bond, that may be imposed in relation thereto and other expenses
(including the reasonable fees and expenses of the Warrant Agent and of counsel to the Company) in connection therewith. Every new Warrant Certificate executed and delivered pursuant to this
Section 2.04 in lieu of any lost, stolen or destroyed Warrant Certificate shall constitute a contractual obligation of the Company, whether or not the allegedly lost, stolen or destroyed
Warrant Certificates shall be at any time enforceable by anyone, and shall be entitled to the benefits of this Agreement equally and proportionately with any and all other Warrant Certificates duly
executed and delivered hereunder. The provisions of this Section 2.04 are exclusive and shall preclude (to the extent lawful) all other rights or remedies with respect to the replacement of
mutilated, lost, stolen, or destroyed Warrant Certificates. 

        Section 2.05    CUSIP Numbers.    The Company in issuing the Warrants may use a "CUSIP" number(s), and if so,
the Warrant Agent shall use the CUSIP number(s) in notices as a convenience to Holders; provided, however, that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number(s) printed in the notice or on the Warrants, and that reliance may be placed only on the other identification numbers
printed on the Warrants. 

        Section 2.06    Certificated Warrants.    If DTC is at any time unwilling or unable to continue as a depository
for a Global Warrant and a successor depository is not appointed by the Company within ninety (90) days or if so requested by any Holder of at least 10,000 Warrants, the Company will issue
Certificated Warrants in exchange for such Global Warrant (to the extent so requested in the case of a request by such a Holder). In connection with the execution and delivery of such Certificated
Warrants, the Warrant Agent shall, upon receipt of the order and at the direction of the Company, reflect on its books and records a decrease in the principal amount of the relevant Global Warrant
equal to the number of such Certificated Warrants and the Company shall execute and the Warrant Agent shall countersign and deliver one or more Certificated Warrants in an equal aggregate number. 

6

  

 
 

ARTICLE III
  
    EXERCISE OF WARRANTS; REDEMPTION

        Section 3.01    Exercise of Class A Warrants.    (a) Each Class A Warrant shall, when the
certificate therefore is countersigned by the Warrant Agent, entitle the Holder thereof, subject to and upon compliance with the provisions of this Agreement (including, in the case of Holders other
than the Investors, the restrictions set forth in Section 3.04(b)), to purchase (i) one (1) share of Common Stock and (ii) one (1) Class B Warrant, in each
case subject to adjustment pursuant to the terms of this Agreement. 

	(b)
	The
Exercise Price of each Class A Warrant (the "Class A Exercise Price") is $1.33, subject to adjustments pursuant to
the terms of this Agreement. 

        Section 3.02    Exercise of Class B Warrants.    (a) Each Class B Warrant shall, when the
certificate therefor is countersigned by the Warrant Agent, entitle the Holder thereof, subject to and upon compliance with the provisions of this Agreement (including, in the case of Holders other
than the Investors, the restrictions set forth in Section 3.04(b)), to purchase one (1) share of Common Stock subject to adjustment pursuant to the terms of this Agreement. 

	(b)
	The
Exercise Price of each Class B Warrant (the "Class B Exercise Price") is $1.77, subject to adjustments pursuant to
the terms of this Agreement. 

        Section 3.03    Redemption.    (a) Notwithstanding anything in this Agreement to the contrary, upon
thirty (30) days prior written notice to the Holders of the Warrants (the date of such notice being hereinafter referred to as the "Redemption Notice
Date"), the Company shall have the right to redeem from the Holders the Warrants at any time after the applicable Issue Date of such Warrants at a price of $0.01 per Warrant
(the "Redemption Price"), if the average of the closing bid prices of the Common Stock for any ten (10) consecutive trading days ending within
thirty (30) days prior to the Redemption Notice Date is greater than or equal to the amount that is equal to one hundred eighty seven and one-half percent (187.5%) of the then
applicable Exercise Price of such Warrant (the "Redemption Target Price"). All
Warrants of a class, except those comprising the Warrant portion of the Unit Purchase Option, are subject to being redeemed if any of such class are sought to be redeemed. 

	(b)
	If
the conditions set forth in Section 3.03(a) are satisfied, and the Company desires to exercise its right to redeem the Class A Warrants and/or the Class B
Warrants, it shall request that the Warrant Agent mail a notice of redemption to each of the Holders of the Class A Warrants and/or the Class B Warrants to be redeemed, first class,
postage prepaid, not later than the thirtieth (30th) day prior to the date fixed for redemption, at its last address as shall appear on the records maintained pursuant to Section 5.01. Any
notice mailed in the manner provided herein shall be conclusively presumed to have been duly given whether or not the Holder actually receives such notice.

	(c)
	The
notice of redemption shall specify (i) the Redemption Price, (ii) the date fixed for redemption, (iii) the place where the Warrant Certificates shall be
delivered and the Redemption Price paid, (iv) that the Warrant Agent and the Placement Agent will assist each Registered Holder of a Class A or Class B Warrant, as the case may
be, in connection with the exercise thereof and (v) that the right to exercise the Warrant shall terminate at 5:00 P.M. (New York time) on the business day immediately preceding the date
fixed for redemption. The date fixed for the redemption of the Warrants shall be the "Redemption Date." No failure to mail such notice nor any defect
therein or in the mailing thereof shall affect the validity of the proceedings for such redemption except as to a Holder (a) to whom notice was not mailed or (b) which shall have
received a notice of redemption which fails to comply with the first sentence of this Section 3.03(c). An affidavit of the Warrant Agent or of the Secretary or an 

7

 

Assistant
Secretary of the Warrant Agent or the Company that notice of redemption has been mailed shall, in the absence of fraud, be prima facie
evidence of the facts stated therein. 

	(d)
	Any
right to exercise a Class A or Class B Warrant shall terminate at 5:00 P.M. (New York time) on the business day immediately preceding the Redemption Date. On
and after the Redemption Date, Holders of the Warrants shall have no further rights except to receive, upon due surrender of the Warrant, the Redemption Price.

	(e)
	From
and after the Redemption Date, the Company shall, at the place specified in the notice of redemption, upon presentation and surrender to the Company by or on behalf of the Holder
thereof of one or more Warrant Certificates evidencing Warrants to be redeemed, deliver or cause to be delivered to or upon the written order of such Holder a sum in cash equal to the aggregate
Redemption Price of each such Warrant. From and after the Redemption Date and upon the deposit or setting aside by the Company of a sum sufficient to redeem all the Warrants called for redemption and
not theretofore duly exercised, such Warrants (including, in the case of the Class A Warrants, the underlying Class B Warrants) shall expire and become void and all rights hereunder and
under the Warrant Certificates, except the right to receive payment of the redemption price, shall cease.

	(f)
	If
the shares of the Common Stock are subdivided or combined into a greater or smaller number of shares of Common Stock, the Redemption Price and the Redemption Target Price shall be
proportionally adjusted by the ratio which the total number of shares of Common Stock outstanding immediately prior to such event bears to the total number of shares of Common Stock to be outstanding
immediately after such event.

	(g)
	Notwithstanding
anything in this Agreement or in the Warrants to the contrary, the Company shall not redeem any Warrant from any Holder who is not an Investor at any time prior to the
date the Form S-1 Registration Statement is declared effective by the Commission. 

        Section 3.04    Exercise; Restrictions on Exercise.    (a) Subject to the terms and conditions set forth
herein, including without limitation Section 3.09, the Warrants shall be exercisable on any Business Day on or after the Issue Date. Any Warrants not exercised by 5:00 p.m., New York
City time, on the applicable Expiration Date shall expire and all rights of the Holders of such Warrants shall terminate. 

	(b)
	Notwithstanding
anything in this Agreement or in the Warrants to the contrary, the Holders of the Warrants (other than the Investors) shall not be permitted to exercise any of the
Class A Warrants or the Class B Warrants until such time as the Form S-1 Registration Statement is declared effective by the Commission under the Securities Act and
continues to be effective at the time of such exercise. 

        Section 3.05    Method of Exercise.    A Warrant (other than any Warrant comprising a part of the Unit Purchase
Option) may be exercised only in whole upon (i) surrender of the related Warrant Certificate to the Warrant Agent at the office of the Warrant Agent, together with the form of election to
purchase the securities on the reverse thereof duly filled in and signed by the Holder thereof and (ii) payment to the Warrant Agent, for the account of the Company, of the Exercise Price for
each Warrant Share or other security issuable upon the exercise of such Warrants then exercised. Such payment shall be made in cash or by certified or official bank check payable to the order of the
Company or by wire transfer of funds to an account designated by the Company for such purpose. In the event that a Warrant Certificate is surrendered at any time prior to the Expiration Date for
exercise of less than all the Warrants represented by such Warrant Certificate, a new Warrant Certificate representing the remaining Warrants shall be issued to the applicable Holder. The Warrant
Agent shall countersign and deliver the required new Warrant Certificates, and the Company, at the Warrant Agent's request, shall supply the Warrant Agent with Warrant Certificates duly signed on
behalf of the Company for such purpose. Upon the request of the Company, the Warrant Agent shall 

8

 

provide to the Company information with respect to (x) the total number of Warrants which have been exercised as of the date of such request and (y) the total amount of funds which have
been received pursuant to the exercise of such Warrants as of the date of such request. 

        Section 3.06    Issuance of Warrant Shares.    Upon the surrender of Warrant Certificates and payment of the
aggregate Exercise Price, as set forth in Section 3.05, the Company shall issue and cause the Warrant Agent or, if appointed, a transfer agent for the Common Stock
("Stock Transfer Agent") to countersign and deliver to or upon the written order of the Holder and in such name or names as the Holder may designate, a
certificate or certificates for the number of full Warrant Shares so purchased upon the
exercise of such Warrants or other securities or property to which it is entitled, registered or otherwise, to the Person or Persons entitled to receive the same (including any depositary institution
so designated by a Holder), together with cash as provided in Section 3.07 in respect of any fractional Warrant Shares otherwise issuable upon such exercise (but only to the extent permitted by
applicable law and the instruments and agreements governing the indebtedness of the Company and its subsidiaries at such time and if the payment of cash is not so permitted, the Company shall issue
Warrant Shares in an amount equal to the next highest whole number). Such certificate or certificates shall be deemed to have been issued and any Person so designated to be named therein shall be
deemed to have become a holder of record of such Warrant Shares as of the date of the surrender of such Warrant Certificates and payment of the per share Exercise Price, as aforesaid;  provided, however,
that if, at such date, the transfer books for the Warrant Shares shall be closed, the certificates for the Warrant Shares in respect
of which such Warrants are then exercised shall be issuable as of the date on which such books shall next be opened and until such date the Company shall be under no duty to deliver any certificates
for such Warrant Shares; provided further, however, that such transfer books, unless otherwise required by law, shall not be closed at any one time for
a period longer than twenty (20) calendar days and shall not be closed without ten (10) days prior written notice to the Holders. 

        Section 3.07    Fractional Warrant Shares.    The Company shall not be required to issue fractional Warrant
Shares on the exercise of Warrants. If more than one Warrant shall be exercised in full at the same time by the same Holder, the number of full Warrant Shares which shall be issuable upon such
exercise shall be computed on the basis of the aggregate number of Warrant Shares which may be purchasable pursuant thereto. If any fraction of a Warrant Share would, except for the provisions of this
Section 3.07, be issuable upon the exercise of any Warrant, the Company shall pay an amount in cash equal to the Current Market Value per Warrant Share, as determined on the day immediately
preceding the date the Warrant is presented for exercise, multiplied by such fraction, computed to the nearest whole cent (but only to the extent permitted by applicable law and the instruments and
agreements governing the indebtedness of the Company and its subsidiaries at such time and if the payment of cash is not so permitted, the Company shall issue Warrant Shares in an amount equal to the
next highest whole number). 

        Section 3.08    Reservation of Warrant Shares.    The Company shall at all times keep reserved out of its
authorized shares of Common Stock a number of shares of Common Stock sufficient to provide for the exercise of all outstanding Warrants. The registrar for the Common Stock shall at all times until the
Expiration Date reserve such number of authorized shares as shall be required for such purpose. The Company will keep a copy of this Agreement on file with the Stock Transfer Agent. The Company will
supply such Stock Transfer Agent with duly executed stock certificates for such purpose and will itself provide or otherwise make available any cash which may be payable as provided in
Section 3.07. The Company will furnish to the Stock Transfer Agent a copy of all notices of adjustments (and certificates related thereto) transmitted to each Holder. 

        Before
taking any action which would cause a reduction in the Exercise Price in accordance with Article IV below the then par value (if any) of the Common Stock, the Company shall
take any and all corporate action which, in the opinion of its counsel, may be necessary in order that the Company may 

9

 

validly and legally issue fully paid and nonassessable shares of Common Stock at the Exercise Price as so adjusted. 

        The
Company covenants that all Warrant Shares which may be issued upon exercise of Warrants shall, upon issue, be duly and validly issued, fully paid, nonassessable, free of preemptive
rights, free from all taxes and free from all liens, charges and security interests with respect to the issue thereof. 

        Section 3.09    Compliance with Law.    (a) Subject to the terms of this Agreement (including the
procedures for exercise set forth in Section 3.04), the Warrants shall be exerciseable at any time and from time to time on any Business Day on or after the Exercise Date;  provided, however, that
notwithstanding anything in this Agreement to the contrary, in no event shall a Holder (other than an Investor) be entitled to
exercise a Warrant unless (i) a registration statement filed under the Securities Act in respect of the issuance of the Warrant Shares upon exercise is then effective or
(ii) (A) the Company has received the opinion of counsel to the Holder (in form and substance satisfactory to the Company) addressed to the Company and the Warrant Agent to the effect
that the issuance of the shares of Common Stock upon the exercise of such Warrants is exempt from the registration requirements of the Securities Act and (B) there is sufficient information for
the Company to conclude that such securities are qualified for sale or exempt from qualification under the applicable securities laws of the states or other jurisdictions in which such Holder resides.
The Company shall use commercially reasonable efforts to cause the Warrant Shares issued upon exercise to be qualified for sale or exempt from qualification under the applicable securities laws of the
states or other jurisdictions in which such Holder resides; provided, however, that the Company shall not be required to qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3.09 or to take any action which would subject it to general service of process or to
taxation in any such jurisdiction where it is not then so subject. 

	(b)
	If
any shares of Common Stock required to be reserved for purposes of the exercise of Warrants require, under any other Federal or state law or applicable governing rule or regulation
of any national securities exchange, registration with or approval of any governmental authority, or listing on any such national securities exchange or quotation system before such shares may be
issued upon exercise, the Company will use its reasonable efforts to cause such shares to be duly registered or approved by such governmental authority or listed on the relevant national securities
exchange or quotation system, as the case may be. 

 
 

ARTICLE IV
  
    ANTIDILUTION PROVISIONS

        Section 4.01    Changes in Common Stock.    In the event that at any time and from time to time the Company
shall (i) pay a dividend or make a distribution on Common Stock in shares of Common Stock or other shares of Capital Stock, (ii) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock or (iv) increase or decrease the number of
shares of Common Stock outstanding by reclassification of its Common Stock, then the number of shares of Common Stock issuable upon exercise of each Warrant immediately after the happening of such
event
shall be adjusted so that, after giving effect to such adjustment, the Holder of each Warrant shall be entitled to receive the number of shares of Common Stock upon exercise of such Warrant that such
Holder would have owned or have been entitled to receive had such Warrants been exercised immediately prior to the happening of the events described above (or, in the case of a dividend or
distribution of Common Stock, immediately prior to the record date therefor), and the Exercise Price shall be adjusted to the price (calculated to the nearest 100th of one cent) determined by
multiplying the Exercise Price immediately prior to such event by a fraction, the numerator of which shall be the number of Warrant Shares purchasable with one Warrant immediately prior to such event
and the 

10

 

denominator of which shall be the number of Warrant Shares purchasable with one Warrant after the adjustment referred to above. An adjustment made pursuant to this Section 4.01 shall become
effective immediately after the distribution date, retroactive to the record date therefor in the case of a dividend or distribution in shares of Common Stock or other shares of Capital Stock, and
shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification. 

        Section 4.02    Cash Dividends and Other Distributions.    In the event that at any time and from time to time
the Company shall distribute to all holders of Common Stock (i) any dividend or other distribution (including any dividend or distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation) of cash, evidences of its indebtedness, shares of its Capital Stock or any other properties or securities or (ii) any options, warrants or other
rights to subscribe for or purchase any of the foregoing (other than, in the case of clause (i) and (ii) above, (A) any dividend or distribution described in Section 4.01,
(B) any rights, options, warrants or securities described in Section 4.03 or Section 4.04 and (C) any cash dividends or other cash distributions from current or retained
earnings), then the number of shares of Common Stock issuable upon the exercise of each Warrant immediately prior to such record date for any such dividend or distribution shall be increased to a
number determined by multiplying the number of shares of Common Stock issuable upon the exercise of such Warrant immediately prior to such record date for any such dividend or distribution by a
fraction, the numerator of which shall be the Current Market Value per share of Common Stock on the record date for such dividend or distribution, and the denominator of which shall be such Current
Market Value per share of Common Stock less the sum of (x) the amount of cash, if any, distributed per share of Common Stock and (y) the then fair value (as determined in good faith by
the Board of Directors, whose determination shall be evidenced by a board resolution filed with the Warrant Agent, a copy of which will be sent to Holders upon request) of the portion, if any, of the
distribution applicable to one share of Common Stock consisting of evidences of indebtedness, shares of stock, securities, other property, warrants, options or subscription or purchase rights; and,
subject to Section 4.09, the Exercise Price shall be adjusted to a number determined by dividing the Exercise Price immediately prior to such record date by the above fraction. Such adjustments
shall be made, and shall only become effective, whenever any dividend or distribution is made; provided, however, that the Company is not required to
make an adjustment pursuant to this Section 4.02 if at the time of such distribution the Company makes the same distribution to Holders of Warrants as it makes to holders of Common Stock pro
rata based on the number of shares of Common Stock for which such Warrants are then exercisable (whether or not currently exercisable). No adjustment shall be made pursuant to this Section 4.02
which shall have the effect of decreasing the number of shares of Common Stock issuable upon exercise of each Warrant or increasing the Exercise Price. 

        Section 4.03    Issuance of Common Stock or Rights or Options.    In the event that at any time or from time to
time the Company shall issue shares of Common Stock or rights, options or warrants or securities convertible or exchangeable into Common Stock, other than in a bona fide underwritten public offering
by or through a syndicate managed by an investment bank of national or regional standing, (a) for a consideration per share (which, in the case of convertible, exchangeable or exercisable
securities shall be the amount received by the Company in consideration for the sale and issuance of such convertible, exchangeable or exercisable securities plus the minimum aggregate amount of
additional consideration payable to the Company upon conversion, exchange or exercise thereof (as determined in good faith by the Board of Directors, whose determination shall be evidenced by a board
resolution filed with the Warrant Agent, a copy of which will be sent to Holders upon request); provided, however, that the value attributable to such
convertible, exchangeable or exercisable securities when issued as part of a unit with debt or other obligations of the Company shall be excluded to the extent it is a result of calculating the
discount applicable to such debt or other obligations of the Company under generally accepted accounting principles) that is less than the Closing Price, or (b) entitling the holders of rights,
options, warrants or securities not originally issued in connection with an underwritten public offering to subscribe for or purchase shares of Common Stock at a price that is 

11

 

Closing Price, the exercise price of each Warrant immediately following the date the Company agrees in writing to issue such shares, rights, options, warrants or other securities, as the case may be
(such date being the "Transaction Date") shall be determined pursuant to the following formula: 

	Exercise Price	 	=	 	(N * EP) + (TN * TP)

(N + TN)
	Where:	 	 	 	 
	 	N	 	=	 	The number of shares of Common Stock outstanding immediately preceding the Transaction Date.
	 	

EP	
 	

=	
 	

The exercise price of the Warrant immediately preceding the Transaction Date.
	 	

TN	
 	

=	
 	

The number of shares of Common Stock issued in such transaction or offered for subscription or purchase or into which the rights, options, warrants or other securities issued in such transaction are convertible or exchangeable.
	 	

TP	
 	

=	
 	

The price per share received or to be received by the Company for the shares of Common Stock issued in such transaction or upon the exercise, conversion or exchange of such rights, options, warrants or other securities issued in such
transaction.

;
provided, however, that no adjustment to the number of Warrant Shares issuable upon the exercise of the Warrants or to the Exercise Price shall be
made as a result of (i) the vesting or exercise of the Warrants, (ii) the exercise, conversion or exchange of any right, option, warrant or security, the issuance of which has previously
required an adjustment to the number of Warrant Shares issuable upon the exercise of the Warrants or to the Exercise Price pursuant to this Section 4.03, (iii) the exercise, conversion
or exchange of any right, option, warrant or security outstanding on the Issue Date (to the extent such exercise, conversion or exchange is made in accordance with the terms of such right, option,
warrant or security as in effect on the Issue Date) or (iv) the issuance, exercise, conversion or exchange of options to acquire Common Stock by officers, directors or employees of the Company.
Any adjustment required by this Section 4.03 shall be made, and shall only become effective, whenever such shares or such rights, options, warrants or securities are issued. No adjustment shall
be made pursuant to this Section 4.03 which shall have the effect of decreasing the number of shares of Common Stock issuable upon exercise of each Warrant or increasing the Exercise Price. 

        Section 4.04    Fundamental Transaction; Liquidation.    (a) Except as provided in
Section 4.04(b), in the event of a Fundamental Transaction, each Holder shall have the right to receive upon exercise of the Warrants the kind and amount of shares of Capital Stock or other
securities or property which such Holder would have been entitled to receive upon completion of or as a result of such Fundamental Transaction had such Warrant been exercised immediately prior to such
event or to the relevant record date for any such entitlement (regardless of whether the Warrants are then exercisable), assuming (to the extent applicable) that such Holder (i) was not a
constituent Person or an affiliate to a constituent Person to such Fundamental Transaction, (ii) made no election with respect thereto, and (iii) was treated alike with the plurality of
non-electing Holders. Unless paragraph (b) is applicable to a Fundamental Transaction, the Company shall provide that the surviving or acquiring Person (the
"Successor Company") in such Fundamental Transaction will enter into an agreement (a "Supplemental Warrant
Agreement") with the Warrant Agent confirming the Holders' rights pursuant to this Section 4.04(a) and providing for adjustments, which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article IV. Any such Supplemental Warrant Agreement shall further provide that such Successor Company will succeed to and be
substituted for every right and obligation of the Company in respect of this Agreement and the Warrants. The provisions of this Section 4.04(a) shall similarly apply to successive Fundamental
Transactions involving any Successor Company. 

12

 

	(b)
	In
the event of (i) a Fundamental Transaction with another Person (other than a subsidiary of the Company) where consideration to the holders of Common Stock in exchange for
their shares is payable solely in cash or (ii) the dissolution, liquidation or winding-up of the Company, the Holders of the Warrants shall be entitled to receive, upon surrender of
their Warrant Certificates, such cash distributions on an equal basis with the holders of Common Stock or other securities issuable upon exercise of the Warrants, as if the Warrants had been exercised
immediately prior to such event, less the Exercise Price. In the event of any Fundamental Transaction described in this Section 4.04(b), the Successor Company and, in the event of any
dissolution, liquidation or winding-up of the Company, the Company, shall deposit promptly with the Warrant Agent the funds, if any, necessary to pay the Holders of the Warrants the
amounts to which they are entitled as described above. After such funds and the surrendered Warrant Certificates are received, the Warrant Agent shall make payment to the Holders by delivering a check
in such amount as is appropriate (or, in the case of consideration other than cash, such other consideration as is appropriate) to such Person or Persons as it may be directed in writing by the
Holders surrendering such Warrant Certificates. 

        Section 4.05    Other Dilutive Events.    In case any event shall occur as to which the other provisions of
this Article IV are not strictly applicable but the failure to make any adjustment would not fairly protect the purchase rights represented by the Warrants in accordance with the essential
intent and principles hereof, then, in each such case, the Company shall appoint a firm of independent public accountants of recognized national standing (which may be the regular auditors of the
Company), which shall give their opinion upon the adjustment, if any, on a basis consistent with the essential intent and principles established in this Section 4, and necessary to preserve,
without dilution, the purchase rights represented by the Warrants. Upon receipt of such opinion, the Company will promptly mail a copy thereof to the Holders of Warrants and shall promptly make the
adjustments described therein. 

        Section 4.06    Superseding Adjustment.    Upon the expiration of any rights, options, warrants or conversion
or exchange privileges which resulted in adjustments pursuant to this Article IV, if any thereof shall not have been exercised, the number of Warrant Shares issuable upon the exercise of each
Warrant shall be readjusted pursuant to the applicable section of this Article IV as if (a) only the shares of Common Stock issuable upon exercise of such rights, options, warrants,
conversion or exchange privileges were the shares of Common Stock, if any, actually issued upon the exercise of such rights, options, warrants or conversion or exchange privileges and
(b) shares of Common Stock actually issued, if any, were issued for the consideration actually received by the Company upon such exercise plus the aggregate consideration, if any, actually
received by the Company for the issuance, sale or grant of all such rights, options, warrants or conversion or exchange privileges whether or not exercised and the Exercise Price shall be readjusted
inversely; provided, however, that no such readjustment (except by reason of an intervening adjustment under Section 4.01) shall have the effect
of decreasing the number of Warrant Shares issuable upon the exercise of each Warrant, or increasing the Exercise Price, by an amount in excess of the amount of the adjustment initially made in
respect of the issuance, sale or grant of such rights, options, warrants or conversion or exchange privileges. 

        Section 4.07    Minimum Adjustment.    The adjustments required by the preceding sections of this
Article IV shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that no adjustment of the Exercise Price or the number of shares of Common
Stock issuable upon exercise of the Warrants that would otherwise be required shall be made unless and until such adjustment either by itself or with other adjustments not previously made increases or
decreases by at least one percent (1%) the Exercise Price or the number of shares of Common Stock issuable upon exercise of the Warrants immediately prior to the making of such adjustment. Any
adjustment representing a change of less than such minimum amount shall be carried forward and made as soon as such adjustment, together with other adjustments required by this Article IV and
not previously made, 

13

 

would result in a minimum adjustment. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence. In computing
adjustments under this Article IV, fractional interests in Common Stock shall be taken into account to the nearest one-hundredth of a share. 

        Section 4.08    Notice of Adjustment.    Whenever the Exercise Price or the number of shares of Common Stock
and other property, if any, issuable upon exercise of the Warrants is adjusted, as herein provided, the Company shall deliver to the Warrant Agent an agreed upon procedures letter of a firm of
independent accountants selected by the Board of Directors (who may be the regular accountants employed by the Company) setting forth, in reasonable detail, the event requiring the adjustment and the
method by which such adjustment was calculated (including a description of the basis on which (i) the then fair value of any evidences of indebtedness, other securities or property or warrants,
options or other subscription or purchase rights was determined and (ii) the Current Market Value of the Common Stock was determined, if either of such determinations were required), and
specifying the Exercise Price and the number of shares of Common Stock issuable upon exercise of the Warrants after giving effect to such adjustment. The Company shall promptly cause the Warrant
Agent, at the Company's expense, to mail a copy of such certificate to each Holder in accordance with Section 9.03. The Warrant Agent shall be under no duty or responsibility with respect to
any such certificate, except to exhibit the same from time to time, to any Holder desiring an inspection thereof during reasonable business hours. Without limiting the foregoing, the Warrant Agent
shall not at any time be under any duty or responsibility to any Holder to determine whether any facts exist which may require any adjustment of the Exercise Price or the number of shares of Common
Stock or other stock or property issuable on exercise of the Warrants, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed in making such
adjustment or the validity or value of any shares of Common Stock, evidences of indebtedness, warrants, options, or other securities or property. 

        Section 4.09    Notice of Certain Transactions.    In the event that the Company shall propose to
(a) pay any dividend payable in securities of any class to the holders of its Common Stock or to make any other non-cash dividend or distribution to the holders of its Common Stock,
(b) offer the holders of its Common Stock rights to subscribe for or to purchase any securities convertible into shares of Common Stock or shares of stock of any class or any other securities,
rights or options, (c) issue any (i) shares of Common Stock, (ii) rights, options or warrants entitling the holders thereof to subscribe for shares of Common Stock or
(iii) securities convertible into or exchangeable or exercisable for Common Stock (in the case of (i), (ii) and (iii), if such event would result in an adjustment hereunder),
(d) effect any capital reorganization, reclassification, consolidation or merger or other Fundamental Transaction, (e) effect the voluntary or involuntary dissolution, liquidation or
winding-up of the Company or (f) make a tender offer or exchange offer with respect to the Common Stock, the Company shall within five (5) days after deciding to take any
such action or make any such offer send to the Warrant Agent a notice and the Warrant Agent shall within five (5) days after receipt thereof, at the expense of the Company, send the Holders a
notice (in such form as shall be furnished to the Warrant Agent by the Company) of such proposed action or offer. Such notice shall be mailed by the Warrant Agent to the Holders at their addresses as
they appear in the Warrant Register, which shall specify the record date for the purposes of such dividend, distribution or rights, or the date such issuance or event is to take place and the date of
participation therein by the holders of Common Stock, if any such date is to be fixed, and shall briefly indicate the effect, if any, of such action on the Common Stock and on the number and kind of
any other shares of stock and on other property, if any, and the number of shares of Common Stock and other property, if any, issuable upon exercise of each Warrant and the Exercise Price after giving
effect to any adjustment pursuant to Article IV which will be required as a result of such action. Such notice shall be given as promptly as possible and (x) in the case of any action
covered by clause (a) or (b) above, at least ten (10) days prior to the record date for determining holders of the Common Stock for purposes of such action or (y) in the
case of any other 

14

 

such action, at least twenty (20) days prior to the date of the taking of such proposed action or the date of participation therein by the holders of Common Stock, whichever shall be the
earlier. 

        Section 4.10    Adjustment to Warrant Certificate.    The form of Warrant Certificate need not be changed
because of any adjustment made pursuant to this Article IV, and Warrant Certificates issued after such adjustment may state the same Exercise Price and the same number of shares of Common Stock
issuable upon exercise of the Warrants as are stated in the Warrant Certificates initially issued pursuant to this Agreement. The Company, however, may at any time in its sole discretion make any
change in the form of Warrant Certificate that it may deem appropriate to give effect to such adjustments and that does not affect the substance of the Warrant Certificate, and any Warrant Certificate
thereafter issued or countersigned, whether in exchange or substitution for an outstanding Warrant Certificate or otherwise, may be in the form as so changed. 

 
 

ARTICLE V
  
    WARRANT TRANSFER BOOKS; RESTRICTIONS ON TRANSFER    
  

        Section 5.01    Transfer and Exchange.    The Warrant Certificates shall be issued in registered form only. The
Company shall cause to be kept at the office of the Warrant Agent a register (the "Warrant Register") in which, subject to such reasonable regulations
as it may prescribe, the Company shall provide for the registration of Warrant Certificates and transfers or exchanges of Warrant Certificates as herein provided. All Warrant Certificates issued upon
any registration of transfer or exchange of Warrant Certificates shall be the valid obligations of the Company, evidencing the same obligations, and entitled to the same benefit under this Agreement,
as the Warrant Certificates surrendered for such registration of transfer or exchange. 

        A
Holder may transfer its Warrants only by complying with the terms of this Agreement. No such transfer shall be effected until, and such transferee shall succeed to the rights of a
Holder only upon, final acceptance and registration of the transfer by the Warrant Agent in the Warrant Register. Prior to the registration of any transfer of Warrants by a Holder as provided herein,
the Company, the Warrant Agent, any agent of the Company or the Warrant Agent may treat the Person in whose name the Warrants are registered as the owner thereof for all purposes and as the Person
entitled to exercise the rights represented thereby, any notice to the contrary notwithstanding. Furthermore, any Holder of a Global Warrant, shall, by acceptance of such Global Warrant, agree that
transfers of beneficial interests in such Global Warrant may be effected only through a book-entry system maintained by the Holder of such Global Warrant (or its agent), and that ownership
of a beneficial interest in the Warrants represented thereby shall be required to be reflected in a book entry. When Warrants are presented to the Warrant Agent with a request to register the transfer
or to exchange them for an equal amount of Warrants of other authorized denominations, the Warrant Agent shall register the transfer or make the exchange in accordance with the provisions hereof. 

        Section 5.02    Registration; Registration of Transfer and Exchange.    When Certificated Warrants are
presented to the Warrant Agent with a request from the Holder of such Warrants to register the transfer or to exchange them for an equal number of Warrants of other authorized denominations, the
Warrant Agent shall register the transfer or make the exchange as requested; provided, however, that (i) every
Warrant Certificate presented and surrendered for registration of transfer or exchange shall be duly endorsed and be accompanied by a written instrument of transfer in form satisfactory to the
Company, duly executed by the Holder thereof or the Holder's attorneys duly authorized in writing and (ii) if being transferred or exchanged pursuant to an effective registration statement
under the 

15

 

Securities Act or pursuant to clause (A), (B) or (C) below, shall be accompanied by the following additional information and documents, as applicable: 

	(A)
	if
such Certificated Warrants are being delivered to the Warrant Agent by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to
that effect (in the form set forth on the reverse of the Warrant); or

	(B)
	if
such Certificated Warrants are being transferred to the Company (by means of a redemption or otherwise), a certification to that effect (in the form set forth on the reverse of the
Warrant); or

	(C)
	if
such Certificated Warrants are being transferred (x) pursuant to an exemption from registration in accordance with Rule 144 under the Securities Act; or (y) in
reliance on another valid exemption from the registration requirements of the Securities Act: (1) a certification to that effect (in the form set forth on the reverse of the Warrant) and
(2) if the Company or Warrant Agent so requests, an opinion of counsel (with customary assumptions and exceptions) or other evidence reasonably satisfactory to it as to the compliance with the
restrictions set forth in the legend set forth in Exhibit C, including, without limitation, in the case of a transfer pursuant to
clause (y), a representation letter from the transferee in the form of Exhibit D hereto. 

        To
permit registrations of transfers and exchanges, the Company shall make available to the Warrant Agent a sufficient number of executed Warrant Certificates to effect such
registrations of transfers and exchanges. No service charge shall be made to the Holder for any registration of transfer or exchange of Warrants, but the Company may require from the transferring or
exchanging Holder payment of a sum sufficient to cover any transfer tax or similar governmental charge payable upon exchanges pursuant to Section 2.04 and exchanges in respect of portions of
Warrants not exercised and the Company may deduct such taxes from any payment of money to be made and such transfer or exchange shall not be consummated (if such taxes are not deducted in full) unless
or until the Holder shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company and the Warrant Agent that such tax has been paid. 

        Section 5.03    Initial Certificated Warrants; Book-Entry Provisions for the Global
Warrants.    (a) Initially the Warrants shall be in the form of Certificated Warrants registered in the name of the respective Investors and the Company shall
deliver such Certificated Warrants to the Warrant Agent for counter-signature and direct the Warrant Agent to deliver the Certificated Warrants to the applicable Investors. As soon as reasonably
practicable after the effectiveness of the Form S-1 Registration Statement, the Company shall exchange such Certificated Warrants for Global Warrants evidencing the Warrants which
initially shall (i) be registered in the name of DTC or the nominee(s) of DTC; and (ii) be delivered to
the Warrant Agent, as custodian for DTC; provided, however, that prior to the time of such exchange any transfers of interests in such Certificated
Warrants shall be made in accordance with Section 5.02. Members of, or participants in, DTC ("Agent Members") shall have no rights under this
Agreement with respect to the Global Warrant held on their behalf by DTC or the Warrant Agent as its custodian, and DTC may be treated by the Company, the Warrant Agent and any agent of the Company or
the Warrant Agent as the absolute owner of such Global Warrant for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Warrant Agent or any agent of
the Company or the Warrant Agent from giving effect to any written certification, proxy or other authorization furnished by DTC or impair, as between DTC and its Agent Members, the operation of
customary practices governing the exercise of the rights of a beneficial owner of any Warrants. 

	(b)
	Transfers
of the Global Warrant shall be limited to transfers of such Global Warrant in whole, but not in part, to DTC, its successors or their respective nominees. Interests of
beneficial owners in the Global Warrant may be transferred in accordance with the rules and procedures 

16

 

of
DTC. Certificated Warrants shall be transferred to all beneficial owners in exchange for their beneficial interests in the Global Warrant if (i) DTC notifies the Company that it is
unwilling or unable to continue as depositary for the Global Warrant or (ii) DTC ceases to be a "Clearing Agency" registered under the Exchange Act and a successor depositary is not appointed
by the Company within ninety (90) days. 

	(c)
	In
connection with the transfer of the entire Global Warrant to beneficial owners pursuant to paragraph (b) of this Section 5.03, the Global Warrant shall be deemed to
be surrendered to the Warrant Agent for cancellation, and the Company shall execute, and the Warrant Agent shall countersign and deliver, to each beneficial owner identified by DTC in exchange for its
beneficial interest in the Global Warrant, Certificated Warrants of authorized denominations representing, in the aggregate, the number of Warrants theretofore represented by the Global Warrant.

	(d)
	Any
Certificated Warrant delivered in exchange for an interest in a Global Warrant pursuant to paragraph (b) or (c) of this Section 5.03 shall bear applicable
legends, if any, as set forth in Section 2.02 hereof.

	(e)
	The
registered holder of the Global Warrant may grant proxies and otherwise authorize any Person, including Agent Members and persons that may hold interests through Agent Members, to
take any action which a Holder is entitled to take under this Agreement or the Warrants.

	(f)
	Beneficial
owners of interests in the Global Warrant may receive Certificated Warrants (which shall bear the legends set forth in Exhibit C  if required by Section 2.02) in accordance with the procedures
of DTC. In connection with the execution, countersigning and delivery of such Certificated Warrants, the
Warrant Agent shall reflect on its books and records a decrease in the number of Warrants represented by the Global Warrant equal to the number of Warrants represented by such Certificated Warrants
and
the Company shall execute and the Warrant Agent shall countersign and deliver one or more Certificated Warrants representing, in the aggregate, the number of Warrants theretofore represented by the
Global Warrant. 

        Section 5.04    Surrender of Warrant Certificates.    Any Warrant Certificate surrendered for registration of
transfer, exchange or exercise of the Warrants represented thereby shall, if surrendered to the Company, be delivered to the Warrant Agent, and all Warrant Certificates surrendered or so delivered to
the Warrant Agent shall be promptly canceled by the Warrant Agent and shall not be reissued by the Company and, except as provided in this Article V in case of an exchange or in
Article III hereof in case of the exercise of less than all the Warrants represented thereby or in case of a mutilated Warrant Certificate or in the case of a transfer, no Warrant Certificate
shall be issued hereunder in lieu thereof. The Warrant Agent shall deliver to the Company from time to time or otherwise dispose of such canceled Warrant Certificates as the Company may direct in
writing. 

 
 

ARTICLE VI
  
    THE WARRANT AGENT    
  

        Section 6.01    Duties and Liabilities.    The Company hereby appoints the Warrant Agent to act as agent of the
Company as set forth in this Agreement. The Warrant Agent hereby accepts the agency established by this Agreement and agrees to perform the same upon the terms and conditions herein set forth, by all
of which the Company and the Holders of Warrants, by their acceptance thereof, shall be bound. The Warrant Agent shall not, by countersigning Warrant Certificates or by any other act hereunder, be
deemed to make any representations as to the validity or authorization of the Warrants or the Warrant Certificates (except as to its countersignature thereon) or of any securities or other property
delivered upon exercise of any Warrant, or as to the accuracy of the calculation of the 

17

 

Exercise Price, or the number or kind or amount of Common Stock or other securities or other property deliverable upon exercise of any Warrant, or as to the correctness of the representations of the
Company made in the certificates that the Warrant Agent receives or the validity, sufficiency or adequacy of any offering materials. The Warrant Agent shall not have any obligation to calculate or
determine any adjustments with respect to either (i) the Exercise Price, or (ii) the type or quantity of securities receivable by a Holder upon exercise or repurchase of such Holder's
Warrants, nor shall the Warrant Agent have a duty to independently verify any such adjustments that may be supplied to it by the Company. The Warrant Agent shall not be (a) liable for any
recital or statement of fact contained herein or in the Warrant Certificates or for any action taken, suffered or omitted by it in good faith in the belief that any Warrant Certificate or any other
documents or any signatures are genuine or properly authorized, (b) responsible for any failure on the part of the Company to comply with any of its covenants and obligations contained in this
Agreement or in the Warrant Certificates or (c) liable for any act or omission in connection with this Agreement except for a material breach of its obligations hereunder or for its own
negligence or willful misconduct. The Warrant Agent is hereby authorized to
accept instructions with respect to the performance of its duties hereunder from the Chief Executive Officer, President, any Vice President or the Secretary or Treasurer of the Company and to apply to
any such officer for instructions (which instructions will be promptly given in writing when requested) and the Warrant Agent shall not be liable for any action taken or suffered to be taken by it in
good faith in accordance with the instructions of any such officer; however, in its sole discretion, the Warrant Agent may in lieu thereof accept other evidence of such or may require such further or
additional evidence as it may deem reasonable. The Warrant Agent shall not be liable for any action taken, or for any failure to take any action, with respect to any matter in the event it requests
instructions from the Company as to that matter and does not receive such instructions within a reasonable period of time after the request therefor. 

        In
the event of any disagreement resulting in adverse claims or demands being made in connection with the matters covered by this Agreement, or in the event that the Warrant Agent, in
good faith, shall be in doubt as to what action it should take hereunder, the Warrant Agent may at its option, refuse to comply with any claims or demands on it, or refuse to take any other action
hereunder, so long as such disagreement continues or such doubt exists, and in any such event, the Warrant Agent shall not be or become liable in any way or to any person for its failure or refusal to
act, and the Warrant Agent shall be entitled to continue so to refrain from action until (i) the rights of all interested parties shall have been fully and finally adjudicated by a court of
competent jurisdiction or (ii) all differences shall have been adjudged and all doubt resolved by agreement among all of the interested persons, and in each of the cases in clauses
(i) and (ii) the Warrant Agent shall have been notified thereof in a writing signed by all such persons. Notwithstanding the preceding, the Warrant Agent may in its discretion obey the
order, judgment, decree or levy of any court, whether with or without jurisdiction, or of any agency of the United States or any political subdivision thereof, or of any agency of the State of New
York or of any political subdivision thereof, and the Warrant Agent is hereby authorized in its sole discretion, to comply with and obey (and shall have no liability to any person for so doing) any
such orders, judgments, decrees or levies which the Warrant Agent is advised by legal counsel of its own choosing is binding upon it. The rights of the Warrant Agent under this paragraph are in
addition to all other rights which it may have by law or otherwise. 

        The
Warrant Agent may execute and exercise any of the rights and powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys, agents or
employees, and the Warrant Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys, agents or employees; provided,
however, reasonable care has been exercised in the selection and in the continued employment of any such attorney, agent or employee. The Warrant Agent shall not be under any
obligation or duty to institute, appear in or defend any action, suit or legal proceeding in respect hereof, unless first indemnified to its satisfaction, but this provision shall not affect the power
of the Warrant Agent to take such action as the Warrant Agent may consider 

18

 

proper, whether with or without such indemnity. The Warrant Agent shall promptly notify the Company in writing of any claim made or action, suit or proceeding instituted against it arising out of or
in connection with this Agreement. 

        The
Warrant Agent may rely and shall be fully protected in acting or refraining from acting upon any certificate, notice, instruction, Warrant, document or other writing believed by it
to be genuine and to have been signed or presented by the proper Person. The Warrant Agent need not investigate any fact
or matter stated in any such certificate, notice, instruction, Warrant, document or other writing. The Warrant Agent shall not be liable for any action that it takes or omits to take in good faith
which it believes to be authorized or within its rights or powers. 

        The
Company will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further acts, instruments and assurances as are
consistent with this Agreement and as may reasonably be required by the Warrant Agent in order to enable it to carry out or perform its duties under this Agreement. 

        The
Warrant Agent shall act hereunder solely as agent of the Company. The Warrant Agent shall not be liable except for (i) the failure to perform such duties as are specifically
set forth herein and (ii) its own negligence or willful misconduct, and no implied covenants or obligations shall be read into this Agreement against the Warrant Agent, whose duties and
obligations shall be determined solely by the express provisions hereof. 

        With
respect to the identity of beneficial owners of interests in the Global Warrant and the number of Warrants beneficially owned by any beneficial owner, the Warrant Agent shall be
entitled to rely conclusively on the records of DTC and shall be fully protected in so relying. 

        Section 6.02    Right To Consult Counsel.    The Warrant Agent may at any time consult with legal counsel
acceptable to it (who may be legal counsel for the Company), and the opinion or advice of such counsel shall be full and complete authorization and protection to the Warrant Agent and the Warrant
Agent shall incur no liability or responsibility to the Company or to any Holder for any action taken, suffered or omitted by it in good faith in accordance with the opinion or advice of such counsel. 

        Section 6.03    Compensation; Indemnification.    The Company agrees to pay to the Warrant Agent from time to
time compensation for all services rendered by it hereunder as the Company and the Warrant Agent may agree in writing from time to time, and to reimburse the Warrant Agent for reasonable expenses and
disbursements incurred in connection with the execution and administration of this Agreement (including the reasonable fees and the expenses of its legal counsel), and further agrees to indemnify the
Warrant Agent for, and to hold it harmless against, any claim, loss, liability or expense arising out of or in connection with the acceptance and administration of this Agreement, including the
reasonable costs and expenses of defending itself against any such claim or liability, except that the Company shall have no liability hereunder to the extent that any such loss, liability or expense
results from the Warrant Agent's material breach of its obligations hereunder or its own negligence or willful misconduct. The obligations of the Company under this Section 6.03 shall survive
the exercise and the expiration of the Warrants and the resignation or removal of the Warrant Agent. No provision of this Agreement shall require the Warrant Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. 

        Section 6.04    No Restrictions on Actions.    The Warrant Agent and any stockholder, director, officer or
employee of the Warrant Agent may buy, sell or deal in any of the Warrants or other securities of the Company or become pecuniarily interested in transactions in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as fully and freely as 

19

 

though it were not the Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other legal entity. 

        Section 6.05    Discharge or Removal; Replacement Warrant Agent.    Except as otherwise provided in this
Section 6.05, and except after the exercise of all of the outstanding Warrants and the delivery of Warrant Shares with respect thereto, no resignation or removal of the Warrant Agent and no
appointment of a successor warrant agent shall become effective until the acceptance of appointment by the successor warrant agent provided herein. The Warrant Agent may resign from its position as
such and be discharged from all further duties and liabilities hereunder (except liabilities arising as a result of the Warrant Agent's material breach of its obligations hereunder or its own
negligence or willful misconduct), after giving one month's prior written notice to the Company. The Company may remove the Warrant Agent upon one month's prior written notice specifying the date when
such discharge shall take effect, and the Warrant Agent shall thereupon in like manner be discharged from all further duties and liabilities hereunder, except as aforesaid. The Warrant Agent or the
Company shall cause to be mailed (by first-class mail, postage prepaid) to each Holder of a Warrant a copy of said notice of resignation or notice of removal, as the case may be. Upon such resignation
or removal the Company shall appoint in writing a new warrant agent. If the Company shall fail to make such appointment within a period of thirty (30) calendar days after it has been notified
in writing of such resignation by the resigning Warrant Agent or after such removal, then the resigning Warrant Agent or the Holder of any Warrant may apply to any court of competent jurisdiction for
the appointment of a new warrant agent. Any new warrant agent, whether appointed by the Company or by such a court, shall be a bank or trust company doing business under the laws of the United States
or any state thereof, in good standing and having a combined capital and surplus of not less than $50,000,000. The combined capital and surplus of any such new warrant agent shall be deemed to be the
combined capital and surplus as set forth in the most recent annual report of its condition published by such warrant agent prior to its appointment; provided,
however, that such reports are published at least annually pursuant to law or to the requirements of a federal or state supervising or examining authority. After acceptance in
writing of such appointment by the new warrant agent, it shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; however, the original Warrant Agent, upon payment of its fees and expenses, shall in all events deliver and transfer to the successor Warrant
Agent all property, if any, at the time held hereunder by the original Warrant Agent and if for any reason it shall be necessary or expedient to execute and deliver any further assurance, conveyance,
act or deed, the same shall be done at the expense of the Company and shall be legally and validly executed and delivered by the resigning or removed Warrant Agent. Not later than the effective date
of any such appointment, the Company shall file a notice thereof with the resigning or removed Warrant Agent and shall forthwith cause a copy of such notice to be mailed to each Holder of a
Warrant. Failure to give any notice provided for in this Section 6.05, however, or any defect therein, shall not affect the legality or validity of the resignation of the Warrant Agent or the
appointment of a new warrant agent, as the case may be. 

        Section 6.06    Successor Warrant Agent.    Any corporation into which the Warrant Agent or any successor
warrant agent may be merged or converted, or any corporation resulting from any consolidation to
which the Warrant Agent or any successor warrant agent shall be a party, and any corporation that acquires substantially all of the corporate trust business of the Warrant Agent, shall be a successor
Warrant Agent under this Agreement without any further act; provided, however, that such corporation would be eligible for appointment as successor to
the Warrant Agent under the provisions of Section 6.05 hereof. Any such successor Warrant Agent shall promptly cause notice of its succession as Warrant Agent to be mailed (by first-class mail,
postage prepaid) to each Holder of a Warrant. 

20

 

 
 

ARTICLE VII
  
    WARRANT HOLDERS    
  

        Section 7.01    Warrant Holder Not Deemed a Holder of Common Stock.    Prior to the exercise of the Warrants,
no Holder of a Warrant Certificate, as such, shall be entitled to any rights of a holder of Common Stock. 

        Section 7.02    Right of Action.    All rights of action with respect to the Warrants are vested in the Holders
of the Warrants, and any Holder of any Warrant, without the consent of the Warrant Agent or the Holder of any other Warrant, may, on such Holder's own behalf and for such Holder's own benefit,
enforce, and may institute and maintain any suit, action or proceeding against the Company suitable to enforce, or otherwise in respect of, such Holder's right to exercise, exchange or tender for
purchase such Holder's Warrants in the manner provided in the Warrant Certificate representing its Warrants and in this Agreement. 

 
 

ARTICLE VIII
  
    MISCELLANEOUS    
  

        Section 8.01    Payment of Taxes.    The Company shall pay any stamp, registration, and other similar taxes and
other governmental charges that may be imposed under the laws of the United States of America or any political subdivision or taxing authority thereof or therein in respect of the issue or delivery
thereof or of other securities deliverable upon exercise of Warrants (other than income taxes imposed on the Holders). The Company shall not be required, however, to pay any tax or other charge
imposed in
connection with any transfer involved in the issue of any Warrant Shares to any Person other than the Holder of a Warrant Certificate surrendered upon the exercise of a Warrant, and in case of such
transfer or payment, the Warrant Agent and the Company shall not be required to issue any Warrant Shares or pay any cash until such tax or charge has been paid or it has been established to the
Warrant Agent's and the Company's satisfaction that no such tax or other charge is due. 

        Section 8.02    Reports to Holders.    The Company shall: 

	(a)
	file
the reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) required to be filed by it, if any,
under the Securities Act and the Exchange Act, and the rules, regulations and policies adopted by the Commission thereunder in a timely manner in accordance with the requirements of the Securities Act
and the Exchange Act; and

	(b)
	file
with the Warrant Agent and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and
reports with respect to compliance by the Company with the conditions and covenants of this Agreement as may be required from time to time by such rules and regulations. 

        Section 8.03    Notices.    All notices and other communications provided for or permitted hereunder shall be
made in writing by hand-delivery, registered first-class mail, telex, telecopier, or any air courier (a) if to a Holder of the Warrants, at the address of such Holder maintained by
the Warrant Agent, (b) if to the Company, to The Immune Response Corporation, 5935 Darwin Court, Carlsbad, California 92008, Attention: Michael L. Jeub, Vice President of Finance and Chief
Financial Officer and (c) if to the Warrant Agent, to Computershare Trust Company, Inc., 350 Indiana Street, Suite 800, Golden, Colorado 80401, Attention:
                        . 

        All
such notices and communications shall be deemed to have been duly given; at the time delivered by hand, if personally delivered; at the time received, if mailed or sent by air
courier; when 

21

 

answered back, if telexed; and when receipt is acknowledged, by recipient's telecopy operator, if telecopied. 

        Section 8.04    Severability.    If any one or more of the provisions contained herein, or the application
thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby. 

        Section 8.05    Binding Effect.    This Agreement shall be binding upon and inure to the benefit of the Company
and the Warrant Agent and their respective successors and permitted assigns, and the Holders from time to time of the Warrants. Nothing in this Agreement is intended or shall be construed to confer
upon any Person, other than the Company, the Warrant Agent and the Holders of the Warrants, any right, remedy or claim under or by reason of this Agreement or any part hereof. 

        Section 8.06    Third-Party Beneficiaries.    The Holders and holders of Warrant Shares shall be intended
third-party beneficiaries to the agreements made hereunder between the Company, on the one hand, and the Warrant Agent, on the other hand, and each Holder and holder of Warrant Shares shall have the
right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights or the rights of Holders or holders of Warrant Shares hereunder. 

        Section 8.07    Amendments.    The Company may, without the consent of the Holders of the Warrants, by
supplemental agreement or otherwise, make any changes or corrections in this Agreement that it shall have been advised by counsel (a) are required to cure any ambiguity or to correct or
supplement any provision herein which may be defective or inconsistent with any other provision herein or (b) add to the covenants and agreements of the Company for the benefit of the Holders,
or surrender any rights or power reserved to or conferred upon the Company in this Agreement; provided, however, that, in each case, such changes or
corrections shall not adversely affect the interests of the Holders or holders of Warrant Shares in any material respect. Amendments or supplements which do not meet the requirements of the preceding
sentence shall require the written consent of the Holders of a majority of the then outstanding Warrants; provided, however, that the consent of each
Holder is required for any amendment or supplement pursuant to which the Exercise Price would be increased (other than pursuant to adjustments as provided in Article IV of this Agreement). The
Warrant Agent shall join with the Company in the execution and delivery of any such supplemental agreements unless it affects the Warrant Agent's own rights, duties of immunities hereunder, in which
case the Warrant Agent may, but shall not be required to, join in such execution and delivery. 

        Section 8.08    Headings.    The headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning of any provision hereof. 

        Section 8.09    GOVERNING LAW.    THIS
AGREEMENT AND THE WARRANTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO, WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.

        Section 8.10    Counterparts.    This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK] 

22

 

        IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed all as of the day and year first above written. 

	 	 	THE IMMUNE RESPONSE CORPORATION
	

 	
 	

By:	

/s/  MICHAEL L. JEUB      

	 	 	 	Name: Michael L. Jeub

Title: Vice President of Finance and Chief Financial Officer
	

 	
 	
COMPUTERSHARE TRUST COMPANY, INC.,
     as Warrant Agent
	

 	
 	

By:	

/s/  DEBORAH SORHEIM      

	 	 	 	Name: Deborah Sorheim

Title: Corporate Secretary
	

 	
 	

and
	

 	
 	

By:	

/s/  IAN YEWER      

	 	 	 	Name: Ian Yewer

Title: President

23

  

 
 

EXHIBIT A-1
  TO WARRANT AGREEMENT    
  

CUSIP
No. [    ]1

No. [    ] Certificate for [    ] 

	1
	To
be filled in as applicable to the Class A Warrants. 

 
 

CLASS A WARRANTS TO PURCHASE COMMON STOCK OF
  THE IMMUNE RESPONSE CORPORATION    
  

        THIS CERTIFIES THAT [    ], or its registered assigns, is the registered holder of the number of Class A Warrants set
forth above (the "Class A Warrants"). Each Class A Warrant entitles the holder thereof (the "Holder"), at its option and subject to the provisions contained herein and in the Warrant
Agreement referred to below, to purchase from THE IMMUNE RESPONSE CORPORATION, a Delaware corporation (the "Company"), (a) one (1) share of Common Stock, par value of $0.0025 per share,
of the Company (the "Common Stock") and (b) one (1) Class B Warrant to purchase one share of Common Stock, at the exercise price of $1.33 (the "Exercise Price"). Each
Class A Warrant shall terminate and become void as of 5:00 p.m., New York City time, on the fifth (5th) anniversary of the Issue Date (as defined in the Warrant Agreement)
of the Class A Warrants (the "Expiration Date") if not previously exercised. The number of shares issuable upon exercise of the Class A Warrants and the Exercise Price per share shall be
subject to adjustment from time to time as set forth in the Warrant Agreement. 

        This
Warrant Certificate is issued under and in accordance with the Warrant Agreement, dated as of December, 2002 (the "Warrant Agreement"), between the Company and Computershare Trust
Company, Inc., as Warrant Agent (the "Warrant Agent," which term includes any successor Warrant Agent under the Warrant Agreement), and is subject to the terms and provisions contained in the
Warrant Agreement, to all of which terms and provisions the Holder of the Class A Warrants evidenced by this Warrant Certificate consents by acceptance hereof. The Warrant Agreement is hereby
incorporated herein by reference and made a part hereof. Reference is hereby made to the Warrant Agreement for a full statement of the respective rights, limitations of rights, duties and obligations
of the Company, the Warrant Agent and the Holders of the Class A Warrants. Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Warrant Agreement. 

        Subject
to the terms of the Warrant Agreement, the Class A Warrants may be exercised in whole by presentation of this Warrant Certificate with the Election to Purchase attached
hereto duly executed and with the simultaneous payment of the Exercise Price in cash (subject to adjustment) to the Warrant Agent for the account of the Company at the office of the Warrant Agent.
Payment of the Exercise Price in cash shall be made by certified or official bank check payable to the order of the Company or by wire transfer of funds to an account designated by the Company for
such purpose. 

        As
provided in the Warrant Agreement and subject to the terms and conditions therein set forth, the Class A Warrants shall be exercisable at any time and from time to time on any
Business Day on or after the Exercise Date; provided, however, that Holders of Class A Warrants (other than the Investors) will be able to
exercise their Class A Warrants only if (i) the Form S-1 Registration Statement relating to the Common Stock and Class B Warrants underlying the Class A
Warrants is effective or (ii) the exercise of such Class A Warrants is exempt from the registration requirements of the Securities Act of 1933, and such securities are qualified for sale
or exempt from qualification under the applicable securities laws of the states or other jurisdictions in which such Holders reside; provided further,
however, that no Class A Warrant shall be exercisable after the fifth (5th) anniversary of its Issue Date. 

A1-1

 

        As
provided in, and subject to, the Warrant Agreement, notwithstanding anything herein or therein to the contrary, upon thirty (30) days prior written notice to the Holders of the
Class A Warrants, the Company shall have the right to redeem from the Holders the Class A Warrants at any time after the Issue Date at a price of $0.01 per Class A Warrant if the
average of the closing bid prices of the Common Stock for any ten (10) consecutive trading days ending within thirty (30) days prior to the Redemption Notice Date (as defined in the
Warrant Agreement) is greater than or equal to the amount that is equal to one hundred eighty seven and one-half (187.5%) of the Exercise Price. 

        In
the event of a Fundamental Transaction, the Holder hereof will be entitled to receive upon exercise of the Class A Warrants the kind and amount of shares of capital stock or
other securities or other property as the Holder would have received had the Holder exercised its Class A Warrants immediately prior to such Fundamental Transaction;  provided, however, that in the
event that, in connection with such Fundamental Transaction (other than with a wholly-owned subsidiary of the Company
that does not result in a reduction in consolidated net worth), consideration to holders of Common Stock in
exchange for their shares is payable solely in cash or in the event of the dissolution, liquidation or winding-up of the Company, the Holder hereof will be entitled to receive such cash
distributions on an equal basis with the holders of Common Stock or other securities issuable upon exercise of the Class A Warrants, as if the Class A Warrants had been exercised
immediately prior to such Fundamental Transaction, less the Exercise Price. 

        As
provided in the Warrant Agreement, the number of shares of Common Stock issuable upon the exercise of the Class A Warrants and the Exercise Price are subject to adjustment upon
the happening of certain events. 

        The
Company may require payment of a sum sufficient to pay all taxes, assessments or other governmental charges in connection with the transfer or exchange of the Warrant Certificates
pursuant to Section 5.02 of the Warrant Agreement, but not for any exchange or original issuance (not involving a transfer) with respect to temporary Warrant Certificates, the exercise of the
Class A Warrants or the Warrant Shares. 

        Upon
any exercise of the Class A Warrants for less than all of the Class A Warrants represented by this Warrant Certificate, there shall be countersigned and issued to the
Holder hereof a new Warrant Certificate representing those Class A Warrants which were not exercised. This Warrant Certificate may be exchanged at the office of the Warrant Agent by presenting
this Warrant Certificate properly endorsed with a request to exchange this Warrant Certificate for other Warrant Certificates evidencing an equal number of Class A Warrants. No fractional
Warrant Shares will be issued upon the exercise of the Class A Warrants, but the Company shall pay an amount in cash equal to the Current Market Value per Warrant Share on the day immediately
preceding the date the Class A Warrant is exercised, multiplied by the fraction of a Warrant Share that would be issuable on the exercise of any Class A Warrant. 

        All
shares of Common Stock issuable by the Company upon the exercise of the Class A Warrants shall, upon such issue, be duly and validly issued and fully paid and
non-assessable. 

        The
holder in whose name this Warrant Certificate is registered may be deemed and treated by the Company and the Warrant Agent as the absolute owner of the Class A Warrants
evidenced by this Warrant Certificate for all purposes whatsoever and neither the Company nor the Warrant Agent shall be affected by notice to the contrary. 

        The
Class A Warrants do not entitle any Holder hereof to any of the rights of a stockholder of the Company. 

[SIGNATURE
PAGE FOLLOWS.] 

A1-2

 

        This
Warrant Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Warrant Agent. 

	 	 	THE IMMUNE RESPONSE CORPORATION
	

 	
 	

By:	

	

 	
 	
COMPUTERSHARE TRUST COMPANY, INC.,
     as Warrant Agent
	

 	
 	

By:	

	

 	
 	

By:	

A1-3

 
 
 

FORM OF ELECTION TO PURCHASE WARRANT SHARES
  (to be executed only upon exercise of Class A Warrants)    

 
  THE IMMUNE RESPONSE CORPORATION    
  

        The undersigned hereby irrevocably elects to exercise
                         Class A Warrants to acquire (a) shares of Common
Stock, par value $0.0025 per share, and (b) Class B Warrants, each of The Immune Response Corporation, at an aggregate exercise price of $1.33 and otherwise on the terms and conditions
specified in the within Warrant Certificate and the Warrant Agreement therein referred to, surrenders this Warrant Certificate and all right, title and interest therein to The Immune Response
Corporation
and directs that the shares of Common Stock and Class B Warrants deliverable upon the exercise of such Class A Warrants be registered or placed in the name and at the address specified
below and delivered thereto. 

	Date:	 
	

 (Signature of Owner)2	

 
	

 (Street Address)	

 
	

 (City) (State) (Zip Code)	

 
	

Signature Guaranteed by:	

 
	

Securities and/or check to be issued to:	

 
	

Please insert social security or identifying number:	

 
	Name:

Street Address:

City, State and Zip Code:

	 

	2
	The
signature must correspond with the name as written upon the face of the within Warrant Certificate in every particular, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a national bank or trust company or by a member firm of any national securities exchange. 

A1-4

 

        A
new Warrant Certificate evidencing any unexercised Class A Warrants evidenced by the within Warrant Certificate is to be issued to: 

        Please
insert social security or identifying number: 

        Name:

        Street
Address: 

        City,
State and Zip Code: 

        In
connection with any transfer of any of the Class A Warrants evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k)
under the Securities Act after the later of the Issue Date of such Class A Warrants and the last date, if any, on which such Class A Warrants were owned by the Company or any Affiliate
of the Company, the undersigned certifies that such Class A Warrants are being transferred in accordance with its terms: 

CHECK ONE BOX BELOW  

	(1)	 	o	 	to the Company; or
	

(2)	
 	

o	
 	

pursuant to an effective registration statement under the Securities Act of 1933; or
	

(3)	
 	

o	
 	

pursuant to another available exemption from registration provided under the Securities Act of 1933.

        Unless
one of the boxes is checked, the Warrant Agent will refuse to register any of the Class A Warrants evidenced by this certificate in the name of any person other than the
registered holder thereof; provided, however, that if box (3) is checked, the Warrant Agent may require, prior to registering any such transfer of the Class A Warrants, such legal
opinions, additional certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act. 

	

 Signature

Signature Guarantee:	

 
	

 Signature must be guaranteed	

 
	

	

 

A1-5

 
 
 

SCHEDULE OF EXCHANGES OF CLASS A GLOBAL WARRANTS3    
  

        The following exchanges of a part of this Class A Global Warrant Certificate for definitive Class A Warrants have been made: 

	Date of

Exchange
	 	Amount of change in this Global

Warrant Certificate
	 	Number of Warrants in this

Global Warrant Certificate

following such change
	 	Signature of authorized

officer of Warrant Agent

	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

	3
	To
be included only if Class A Warrant is in Global form. 

A1-6

  

 
 

EXHIBIT A-2
  TO WARRANT AGREEMENT    
  

CUSIP
No. [    ]4

No. [    ] Certificate for [    ] 

	4
	To
be filled in as applicable to the Class B Warrants. 

 
 

CLASS B WARRANTS TO PURCHASE COMMON STOCK OF
  THE IMMUNE RESPONSE CORPORATION    
  

        THIS CERTIFIES THAT [    ], or its registered assigns, is the registered holder of the number of Class B Warrants set
forth above (the "Class B Warrants"). Each Class B Warrant entitles the holder thereof (the "Holder"), at its option and subject to the provisions contained herein and in the Warrant
Agreement referred to below, to purchase from THE IMMUNE RESPONSE CORPORATION, a Delaware corporation (the "Company"), one (1) share of Common Stock, par value of $0.0025 per share, of the
Company (the "Common Stock") at the exercise price of $1.77 (the "Exercise Price"). Each Class B Warrant shall terminate and become void as of 5:00 p.m., New York City time, on the fifth
(5th) anniversary of the Issue Date (as defined in the Warrant Agreement) of the Class B Warrant (the "Expiration Date") if not previously exercised. The number of shares issuable
upon exercise of the Class B Warrants and the Exercise Price per share shall be subject to adjustment from time to time as set forth in the Warrant Agreement. 

        This
Warrant Certificate is issued under and in accordance with the Warrant Agreement, dated as of December 10, 2002 (the "Warrant Agreement"), between the Company and
Computershare Trust
Company, Inc., as Warrant Agent (the "Warrant Agent," which term includes any successor Warrant Agent under the Warrant Agreement), and is subject to the terms and provisions contained in the
Warrant Agreement, to all of which terms and provisions the Holder of the Class B Warrants evidenced by this Warrant Certificate consents by acceptance hereof. The Warrant Agreement is hereby
incorporated herein by reference and made a part hereof. Reference is hereby made to the Warrant Agreement for a full statement of the respective rights, limitations of rights, duties and obligations
of the Company, the Warrant Agent and the Holders of the Class B Warrants. Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Warrant Agreement. 

        Subject
to the terms of the Warrant Agreement, the Class B Warrants may be exercised in whole by presentation of this Warrant Certificate with the Election to Purchase attached
hereto duly executed and with the simultaneous payment of the Exercise Price in cash (subject to adjustment) to the Warrant Agent for the account of the Company at the office of the Warrant Agent.
Payment of the Exercise Price in cash shall be made by certified or official bank check payable to the order of the Company or by wire transfer of funds to an account designated by the Company for
such purpose. 

        As
provided in the Warrant Agreement and subject to the terms and conditions therein set forth, the Class B Warrants shall be exercisable at any time and from time to time on any
Business Day on or after the Exercise Date; provided, however, that Holders of Class B Warrants (other than the Investors) will be able to
exercise their Class B Warrants only if (i) the Form S-1 Registration Statement relating to the Common Stock underlying the Class B Warrants is effective or
(ii) the exercise of such Class B Warrants is exempt from the registration requirements of the Securities Act of 1933, and such securities are qualified for sale or exempt from
qualification under the applicable securities laws of the states or other jurisdictions in which such Holders reside; provided further, however, that no
Class B Warrant shall be exercisable after the fifth (5th) anniversary of its Issue Date. 

        As
provided in, and subject to, the Warrant Agreement, notwithstanding anything herein or therein to the contrary, upon thirty (30) days prior written notice to the Holders of the
Class B Warrants, the 

A2-1

 

Company shall have the right to redeem from the Holders the Class B Warrants at any time after the Issue Date at a price of $0.01 per Class B Warrant if the average of the closing bid
prices of the Common Stock for any ten (10) consecutive trading days ending within thirty (30) days prior to the Redemption Notice Date (as defined in the Warrant Agreement) is greater
than or equal to the amount that is equal to one hundred eighty seven and one-half (1875.5%) of the Exercise Price. 

        In
the event of a Fundamental Transaction, the Holder hereof will be entitled to receive upon exercise of the Class B Warrants the kind and amount of shares of capital stock or
other securities or other property as the Holder would have received had the Holder exercised its Class B Warrants immediately prior to such Fundamental Transaction;  provided, however, that in the
event that, in connection with such Fundamental Transaction (other than with a wholly-owned subsidiary of the Company
that does not result in a reduction in consolidated net worth), consideration to holders of Common Stock in exchange for their shares is payable solely in cash or in the event of the dissolution,
liquidation or winding-up of the Company, the Holder hereof will be entitled to receive such cash distributions on an equal basis with the holders of Common Stock or other securities
issuable upon exercise of the Class B
Warrants, as if the Class B Warrants had been exercised immediately prior to such Fundamental Transaction, less the Exercise Price. 

        As
provided in the Warrant Agreement, the number of shares of Common Stock issuable upon the exercise of the Class B Warrants and the Exercise Price are subject to adjustment upon
the happening of certain events. 

        The
Company may require payment of a sum sufficient to pay all taxes, assessments or other governmental charges in connection with the transfer or exchange of the Warrant Certificates
pursuant to Section 5.02 of the Warrant Agreement, but not for any exchange or original issuance (not involving a transfer) with respect to temporary Warrant Certificates, the exercise of the
Class B Warrants or the Warrant Shares. 

        Upon
any exercise of the Class B Warrants for less than all of the Class B Warrants represented by this Warrant Certificate, there shall be countersigned and issued to the
Holder hereof a new Warrant Certificate representing those Class B Warrants which were not exercised. This Warrant Certificate may be exchanged at the office of the Warrant Agent by presenting
this Warrant Certificate properly endorsed with a request to exchange this Warrant Certificate for other Warrant Certificates evidencing an equal number of Class B Warrants. No fractional
Warrant Shares will be issued upon the exercise of the Class B Warrants, but the Company shall pay an amount in cash equal to the Current Market Value per Warrant Share on the day immediately
preceding the date the Class B Warrant is exercised, multiplied by the fraction of a Warrant Share that would be issuable on the exercise of any Class B Warrant. 

        All
shares of Common Stock issuable by the Company upon the exercise of the Class B Warrants shall, upon such issue, be duly and validly issued and fully paid and
non-assessable. 

        The
holder in whose name this Warrant Certificate is registered may be deemed and treated by the Company and the Warrant Agent as the absolute owner of the Class B Warrants
evidenced by this Warrant Certificate for all purposes whatsoever and neither the Company nor the Warrant Agent shall be affected by notice to the contrary. 

        The
Class B Warrants do not entitle any Holder hereof to any of the rights of a stockholder of the Company. 

[SIGNATURE
PAGE FOLLOWS.] 

A2-2

 

        This
Warrant Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Warrant Agent. 

	 	 	THE IMMUNE RESPONSE CORPORATION
	

 	
 	

By:	

	

 	
 	
COMPUTERSHARE TRUST COMPANY, INC.,
     as Warrant Agent
	

 	
 	

By:	

	

 	
 	

By:	

A2-3

 
 
 

FORM OF ELECTION TO PURCHASE WARRANT SHARES
  (to be executed only upon exercise of Class B Warrants)    

 
 

THE IMMUNE RESPONSE CORPORATION    
  

        The undersigned hereby irrevocably elects to exercise
                         Class B Warrants to acquire shares of Common Stock, par
value $0.0025 per share, of The Immune Response Corporation, at an exercise price per share of Common Stock of $1.77 and otherwise on the terms and conditions specified in the within Warrant
Certificate and the Warrant Agreement therein referred to, surrenders this Warrant Certificate and all right, title and interest therein to The Immune Response Corporation and directs that the
shares of Common Stock deliverable upon the exercise of such Class B Warrants be registered or placed in the name and at the address specified below and delivered thereto. 

	

 (Signature of Owner)2	

 
	

 (Street Address)	

 
	

 (City) (State) (Zip Code)	

 
	

Signature Guaranteed by:	

 
	

Securities and/or check to be issued to:	

 
	

Please insert social security or identifying number:	

 
	Name:

Street Address:

City, State and Zip Code:

	 

	2
	The
signature must correspond with the name as written upon the face of the within Warrant Certificate in every particular, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a national bank or trust company or by a member firm of any national securities exchange. 

A2-4

 

        A
new Warrant Certificate evidencing any unexercised Class B Warrants evidenced by the within Warrant Certificate is to be issued to: 

        Please
insert social security or identifying number: 

        Name:

        Street
Address: 

        City,
State and Zip Code: 

        In
connection with any transfer of any of the Class B Warrants evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k)
under the Securities Act after the later of the Issue Date of such Class B Warrants and the last date, if any, on which such Class B Warrants were owned by the Company or any Affiliate
of the Company, the undersigned certifies that such Class B Warrants are being transferred in accordance with its terms: 

CHECK ONE BOX BELOW  

	(1)	 	o	 	to the Company; or
	

(2)	
 	

o	
 	

pursuant to an effective registration statement under the Securities Act of 1933; or
	

(3)	
 	

o	
 	

pursuant to another available exemption from registration provided under the Securities Act of 1933.

        Unless
one of the boxes is checked, the Warrant Agent will refuse to register any of the Class B Warrants evidenced by this certificate in the name of any person other than the
registered holder thereof; provided, however, that if box (3) is checked, the Warrant Agent may require, prior to registering any such transfer of the Class B Warrants, such legal
opinions, additional certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act. 

	

 Signature

Signature Guarantee:	

 
	

 Signature must be guaranteed	

 
	

	

 

A2-5

 
 
 

SCHEDULE OF EXCHANGES OF CLASS B GLOBAL WARRANTS6    
  

        The following exchanges of a part of this Class B Global Warrant Certificate for definitive Warrants have been made: 

	Date of

Exchange
	 	Amount of change in this Global

Warrant Certificate
	 	Number of Warrants in this

Global Warrant Certificate

following such change
	 	Signature of authorized

officer of Warrant Agent

	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

	6
	To
be included only if Class B Warrant is in Global form. 

A2-6

  

 
 

EXHIBIT B
  TO WARRANT AGREEMENT    
  

 
 

FORM OF LEGEND FOR GLOBAL WARRANTS    
  

        Any Global Warrant authenticated and delivered hereunder shall bear a legend in substantially the following form: 

        THIS WARRANT IS A GLOBAL WARRANT WITHIN THE MEANING OF THE WARRANT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF
A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS WARRANT IS NOT EXCHANGEABLE FOR WARRANTS REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE WARRANT AGREEMENT, AND NO TRANSFER OF THIS WARRANT (OTHER THAN A TRANSFER OF THIS WARRANT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY
TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE WARRANT AGREEMENT.

        UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

B-1

  

 
 

EXHIBIT C
  TO THE WARRANT AGREEMENT    
  

 
 

FORM OF LEGEND    
  

PARAGRAPH A  

        THE SECURITY EVIDENCED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY PRIOR TO (OR, IN THE CASE OF AN AFFILIATE OF THE COMPANY, FOLLOWING) THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR
ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) ONLY (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH OFFER, SALE OR TRANSFER OR (C) PURSUANT TO A VALID AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

PARAGRAPH B  

        THE SECURITY EVIDENCED BY THIS CERTIFICATE MAY NOT BE EXERCISED BY ANY HOLDER (OTHER THAN A HOLDER WHO OR WHICH HAS PURCHASED THIS
SECURITY DIRECTLY FROM THE COMPANY) UNTIL SUCH TIME AS A REGISTRATION STATEMENT ON FORM S-1 COVERING THE ISSUANCE BY THE COMPANY TO SUCH HOLDER OF THE SECURITIES UNDERLYING THIS SECURITY
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH EXERCISE.

C-1

  

 
 

EXHIBIT D
  TO WARRANT AGREEMENT    
  

 
 

FORM OF ACCREDITED INVESTOR CERTIFICATE
  TRANSFEREE LETTER OF REPRESENTATION    
  

Computershare
Trust Company, Inc. 

[                        ]

[                        ] 

Attention:
[                        ] 

Ladies
and Gentlemen: 

        In
connection with our proposed purchase of [    ] Warrants (the "Warrants") entitling the holders thereof to purchase (i) shares of common
stock, par value $0.0025 per share, and (ii) in the case of the Class A Warrants, Class B Warrants, of The Immune Response Corporation (the "Issuer"), we confirm that: 

	1.
	We
are (a) an "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act of 1933, as amended (the
"Securities Act")), purchasing for our own account or for
the account of such an institutional "accredited investor" as to which we exercise sole investment discretion, and we have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Warrants, and we and any account for which we are acting are each able to bear the economic risk of our or its investment,
(b) a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) or (c) a non-"U.S. person" (as defined in Rule 902 of the Securities
Act).

	2.
	We
understand and acknowledge that the Warrants have not been registered under the Securities Act or any other applicable securities law, and that the Warrants may not be offered or
sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any account for which we are acting, that if we should sell any Warrants within the time period
referred to in Rule 144(k) of the Securities Act, we will do so only (A) to the Issuer or any subsidiary thereof, (B) pursuant to the exemption from registration provided by
Rule 144 under the Securities Act (if available) or (C) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing
any of the Warrants from us a notice advising such purchaser that resales of the Warrants are restricted as stated herein.

	3.
	We
understand that, on any proposed resale of any Warrants, we will be required to furnish to the Issuer and the Warrant Agent such certifications, legal opinions and other information
as the Issuer and the Warrant Agent may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Warrants purchased by us will bear
a legend to the foregoing effect.

	4.
	We
are acquiring the Warrants for investment purposes and not with a view to distribution thereof or with any present intention of offering or selling any Warrants, except as permitted
above; provided that the disposition of our property and property of any accounts for which we are acting as fiduciary will remain at all times within our control. 

        You
and the Issuer are entitled to rely upon this letter and you are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered hereby. 

D-1

 

        PURSUANT TO SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, THIS LETTER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

	 	 	Very truly yours,
	

 	
 	

(Name of Purchaser)
	 	 	By:	 
	 	 	 	

	 	 	Name:
	 	 	Title:
	 	 	Date:

        Upon
transfer, the Warrants would be registered in the name of the new beneficial owner as follows: 

	By:	 	 	 	 
	 	 	
	 	 
	 	 	Date:

Taxpayer ID number:	 	 

D-2

QuickLinks

WARRANT AGREEMENT

TABLE OF CONTENTS

WARRANT AGREEMENT

ARTICLE I CERTAIN DEFINITIONS

ARTICLE II ORIGINAL ISSUE OF WARRANTS

ARTICLE III EXERCISE OF WARRANTS; REDEMPTION

ARTICLE IV ANTIDILUTION PROVISIONS

ARTICLE V WARRANT TRANSFER BOOKS; RESTRICTIONS ON TRANSFER

ARTICLE VI THE WARRANT AGENT

ARTICLE VII WARRANT HOLDERS

ARTICLE VIII MISCELLANEOUS

EXHIBIT A-1 TO WARRANT AGREEMENT

CLASS A WARRANTS TO PURCHASE COMMON STOCK OF THE IMMUNE RESPONSE CORPORATION

FORM OF ELECTION TO PURCHASE WARRANT SHARES (to be executed only upon exercise of Class A Warrants)

THE IMMUNE RESPONSE CORPORATION

SCHEDULE OF EXCHANGES OF CLASS A GLOBAL WARRANTS3

EXHIBIT A-2 TO WARRANT AGREEMENT

CLASS B WARRANTS TO PURCHASE COMMON STOCK OF THE IMMUNE RESPONSE CORPORATION

FORM OF ELECTION TO PURCHASE WARRANT SHARES (to be executed only upon exercise of Class B Warrants)

THE IMMUNE RESPONSE CORPORATION

SCHEDULE OF EXCHANGES OF CLASS B GLOBAL WARRANTS6

EXHIBIT B TO WARRANT AGREEMENT

FORM OF LEGEND FOR GLOBAL WARRANTS

EXHIBIT C TO THE WARRANT AGREEMENT

FORM OF LEGEND

EXHIBIT D TO WARRANT AGREEMENT

FORM OF ACCREDITED INVESTOR CERTIFICATE TRANSFEREE LETTER OF REPRESENTATIONQuickLinks
 -- Click here to rapidly navigate through this document
  

Exhibit 10.1  

 
 

SUMMARY INSTRUCTION SHEET FOR PURCHASER
  (to be read in conjunction with the entire Purchase Agreement which follows)    

	A.
	Complete the following items on BOTH Purchase Agreements:

	1.
	Page 24—Signature:
	(i)
	Name
of Purchaser (Individual or Institution)

	(ii)
	Number
of Units Purchaser Elects to Purchase

	(iii)
	Aggregate
Purchase Price

	(iv)
	Name
of Individual representing Purchaser (if an Institution)

	(v)
	Title
of Individual representing Purchaser (if an Institution)

	(vi)
	Signature
of Individual Purchaser or Individual representing Purchaser 

	2.
	Appendix I—Stock and Warrant Certificate Questionnaire / Registration Statement Questionnaire (follows
Page 24)

	3.
	Appendix II—Accredited Investor Certification & Investor Profile (follows
Appendix I)

	4.
	Fax all forms to Diann Ellis at 212-319-8457 and then  send BOTH completed and signed original Purchase Agreements including Appendix I and Appendix II to: 

	 	 	Diann Ellis

Spencer Trask Ventures, Inc.

535 Madison Avenue, 18th Floor

New York, NY 10022

	B.
	Upon the resale of the Unit Securities (or the shares of Common Stock underlying the Warrants by the
Purchasers), AFTER the Registration Statement covering the resale of the Unit Securities (and the exercise by subsequent purchasers of the Warrants) is effective, as described in the Purchase
Agreement, the Purchaser:

	1.
	must
deliver a current prospectus of the Company to the buyer (prospectuses may be obtained from the Company at the Purchaser's request); and

	2.
	must
send a letter in the form of Appendix III to the Company so that the Unit Securities may be properly transferred. 

	C.
	Upon the resale of the Unit Securities (or the shares of Common Stock underlying the Warrants by the
Purchasers), BEFORE the Registration Statement covering the resale of the Unit Securities (and the exercise by subsequent purchasers of the Warrants) is effective, as described in the Purchase
Agreement, the Purchaser:

	1.
	shall
cause the transferee or assignee to agree in writing to also be bound by all of the provisions of the Purchase Agreement and the Warrant Agreement applicable to the Purchaser;

	2.
	agree
in writing with the transferee or assignee to assign his rights under the Purchase Agreement and the Warrant Agreement and furnish copies of such agreements to the Company after
such assignment; 

B-1

 

	3.
	furnish
to the Company written notice of (a) the name and address of such transferee or assignee and (b) the securities with respect to which such registration rights are
being transferred or assigned; and

	4.
	must
send a letter in the form of Appendix III to the Company so that the Unit Securities may be properly transferred. 

B-2

 

 
 

PURCHASE AGREEMENT    
  

        PURCHASE AGREEMENT (this "Agreement") is made as of the    th day of November 2002, by and between The Immune Response
Corporation, a corporation organized under the laws of the State of Delaware (the "Company"), with its principal offices at 5935 Darwin Court, Carlsbad, California 92008, and the purchaser whose name
and address is set forth on the signature page hereto (the "Purchaser"). 

        IN
CONSIDERATION of the mutual covenants contained in this Agreement, the Company and the Purchaser agree as follows: 

        SECTION
1.    Authorization of Sale of the Units.    Subject to the terms and conditions of this Agreement and the
Warrant Agreement attached hereto as Exhibit A (the "Warrant Agreement"), the Company has authorized the sale of up to eighty (80) Units (plus up to an additional twenty-four
(24) Units to cover any over-subscriptions). Each "Unit" consists of (a) shares of the Company's common stock, par value $0.0025 per share (the "Common Stock"), and
(b) warrants (the "Class A Warrants") to purchase initially (i) one (1) share of Common Stock and (ii) one (1) warrant (the "Class B Warrants"; and,
together with the Class A Warrants, the "Warrants") to purchase initially one (1) share of Common Stock. The number of (x) shares of Common Stock and (y) Class A
Warrants per Unit will be equal in each case to
the purchase price of $100,000 per Unit divided by that amount equal to eighty (80%) percent multiplied by the lesser of the (i) average of the closing bid prices per share of Common Stock, as
quoted on The Nasdaq Stock Market, for the ten (10) consecutive trading days immediately preceding the Closing Date (as defined in Section 3 hereof) and (ii) closing bid price of
the Common Stock on the Closing Date. The shares of Common Stock and/or the Warrants sold to the Purchaser pursuant to this Agreement shall collectively be referred to herein as the "Unit Securities."
The offer by the Company for the sale of the Units is hereinafter referred to as the "Offering." 

        SECTION
2.    Agreement to Sell and Purchase the Units.    At the Closing (as defined in Section 3 hereof), the
Company will sell to the Purchaser, and the Purchaser will purchase from the Company, upon the terms and conditions hereinafter set forth, the number of Units set forth on the signature page (page
24) of this Agreement. 

        The
Company proposes to enter into this same form of purchase agreement with certain other investors (the "Other Purchasers") and expects to complete sales of the Units to them. The
Purchaser and the Other Purchasers are hereinafter sometimes collectively referred to as the "Purchasers," and this Agreement and the agreements executed by the Other Purchasers are hereinafter
sometimes collectively referred to as the "Agreements." The term "Placement Agent" shall mean Spencer Trask Ventures, Inc. 

        If
the Closing has not occurred on or prior to the date that is one hundred and twenty (120) calendar days after the date of the Memorandum (as defined in Section 4
hereof), the Company's obligation to sell, and the Purchaser's obligation to purchase, the Units will expire as of such date. 

        SECTION
3.    Delivery of the Units at the Closing.    The completion of the purchase and sale of the Units (the
"Closing") shall occur at a place and time (the "Closing Date") to be agreed upon by the Company and the Placement Agent and of which the Purchasers will be promptly notified by facsimile transmission
or otherwise in accordance with Section 9 hereof. 

        At
the Closing, the Company shall deliver to the Purchaser one or more stock and warrant certificates registered in the name of the Purchaser, or in such nominee name(s) as designated by
the Purchaser in writing, representing the number of Units set forth in Section 2 above and bearing an appropriate legend indicating that the Units were sold in reliance upon the exemptions
from registration under the Securities Act of 1933, as amended (the "Securities Act"), provided by Section 4(2) thereof and Rule 506 thereunder. The name(s) in which the certificates are
to be 

B-3

 

registered are set forth in the Stock and Warrant Certificate Questionnaire attached hereto as part of Appendix I. The Company's obligation to complete the sale of the Units and deliver such
stock and warrant certificate(s) to the Purchaser at the Closing shall be subject to the following conditions only, any one or more of which may be waived in writing by the Company: (a) the
receipt by the Company of same-day funds in the full amount of the purchase price for the Units being purchased hereunder; (b) the completion of the purchases and sales, for cash,
under the Agreements with all Purchasers of a
minimum of sixty (60) Units; and (c) the accuracy of the representations and warranties made herein by the Purchaser as of the date hereof and the fulfillment of the undertakings of the
Purchaser set forth in this Agreement to be fulfilled by it prior to the Closing. The Purchaser's obligation to accept delivery of such stock and warrant certificate(s) and to pay for the Unit
Securities evidenced thereby shall be subject to the following conditions only: (a) the accuracy of the representations and warranties made herein by the Company as of the date hereof and as of
the Closing Date as if made on such date; (b) the fulfillment of the undertakings of the Company set forth in this Agreement to be fulfilled by it prior to Closing; and (c) the
completion of the purchases and sales, for cash, under the Agreements with all Purchasers of a minimum of sixty (60) Units. 

        SECTION
4.    Representations, Warranties and Covenants of the Company.    The Company hereby represents and warrants
to, and covenants with, the Purchaser as follows that, except as disclosed or incorporated by reference in, (i) the Confidential Private Placement Memorandum, dated October 22, 2002,
prepared by the Company, including all exhibits, supplements and amendments thereto (the "Memorandum"), (ii) the SEC Reports (as defined in Section 4.14 hereof) or (iii) the
Disclosure Schedule to be delivered by the Company prior to the execution and delivery of this Agreement (the "Disclosure Schedule"): 

        4.01    Organization and Qualification.    The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware. The Company is qualified to do business as a foreign corporation in each jurisdiction in which qualification is required, except where failure to
so qualify could not reasonably be expected to have a material adverse effect upon the business, financial condition, properties or operations of the Company taken as a whole (a "Material Adverse
Effect"). The only subsidiaries of the Company are as set forth on Section 4.1 of the Disclosure Schedule. 

        Section 4.1A
of the Disclosure Schedule discloses all Special Purpose Entities (as defined below) owned directly or indirectly, in whole or in part, by the Company or any of its
affiliates or in or with respect to which the Company or its affiliates have a direct or indirect business relationship or interest of any kind, in whole or in part, including any equity interest, any
leasing relationship, any loan or other financing relationship, any other contractual relationship or any other economic interest, relationship or arrangement of any kind, where such interest or
interests are directly or indirectly related to, or part of, the business or the assets owned by or the liabilities of the Company. Section 4.1B of the Disclosure Schedule hereto separately
discloses any guarantees by the Company, its subsidiaries or other affiliates of the liabilities of or with respect to any Special Purpose Entities. "Special Purpose
Entities" has the meaning given that term under U.S. accounting rules governing consolidation, including proposed rules and interpretations of the FASB, such as those contained
in guidance (as proposed or as finally adopted) interpreting Statement of Financial Accounting Standard 94, Consolidation of all Majority-Owned
Subsidiaries and Accounting Research Bulletin No. 51, Consolidated Financial Statements. 

        4.02    Authorized Capital Stock.    Except as set forth in Section 4.2 of the Disclosure Schedule, the Company
had the authorized and outstanding capital stock as set forth under the heading "Capitalization" in the Memorandum as of the date set forth or incorporated by reference therein; all issued and
outstanding shares of the Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, have been issued in material compliance with all Federal and State securities
laws and were not issued in violation of or subject to any preemptive rights or other rights to 

B-4

 

subscribe for or purchase securities. Except as set forth in Section 4.2 of the Disclosure Schedule, the Company does not have any outstanding options to purchase, or any preemptive rights or
other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any such options, rights,
convertible securities or obligations. 

        4.03    No Other Registration Rights.    Except (a) as set forth in Section 4.3 of the Disclosure
Schedule and (b) as contemplated by Section 7 hereof, no holder of any security of the Company has any demand, "piggy-back" or other right to require the Company to register
the sale of any security owned by such holder under the Securities Act or any right to join or participate in any such registration of the Company's securities (including such registrations
contemplated by the Registration Statement described and defined in Section 7 hereof). 

        4.04    Authority.    The Company has all requisite corporate power and authority and has all necessary approvals,
licenses, permits and authorizations to own, operate or lease its properties and to carry its business as now conducted, except where the failure to have any such approval, license, permit or
authorization could not reasonably be expected to have a Material Adverse Effect. 

        4.05    Due Execution, Delivery and Performance of Agreements.    The Company has all requisite corporate power and
authority to enter into this Agreement and the Warrant Agreement and to perform the transactions contemplated hereby and thereby. This Agreement and the Warrant Agreement have been duly authorized,
executed and delivered by the Company. The execution, delivery and performance of this Agreement and the Warrant Agreement by the Company and the consummation of the transactions contemplated hereby
and thereby will not (i) violate any provision of the organizational documents of the Company or (ii) result in the creation of any lien, charge, security interest, adverse claim or
encumbrance upon any assets or properties of the Company pursuant to the terms or provisions of, or conflict with, result in the breach or violation of, or constitute, either by itself or upon notice
or the passage of time or both, a default under (A) any material agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit or other material instrument to which the
Company is a party or by which the Company or any of its assets or properties may be otherwise bound or affected or (B) any statute or any judgment, decree, order, rule or regulation of any
court or any regulatory body, administrative agency or other governmental body applicable to the Company or any of its properties. No material consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental body is required for the execution and delivery of this Agreement or the Warrant Agreement or the consummation of the transactions
contemplated by this Agreement or the Warrant Agreement, except for compliance with the "blue sky" laws and Federal securities laws applicable to the (i) Offering, (ii) resale of the
Unit Securities and (iii) offering and sale of the Common Stock underlying the Warrants. Upon the execution and delivery by the Company of this Agreement and the Warrant Agreement, and assuming
the valid execution and delivery thereof by the Purchaser, this Agreement and the Warrant Agreement constitute valid and binding obligations of the Company, enforceable in accordance with their
respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' and contracting parties' rights
generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification agreements of the Company in Section 7.3 hereof may be held violative of public policy and therefore legally unenforceable. 

        4.06    Accountants.    BDO Seidman, LLP, the Company's independent accountants, are independent accountants as
required by the Securities Act and the rules and regulations promulgated thereunder (the "Rules and Regulations"). 

        4.07    No Defaults.    Except as set forth in Section 4.7 of the Disclosure Schedule, the Company is not in
violation or default of any provision of its certificate of incorporation or any provision of its 

B-5

 

bylaws, and, except for defaults, violations and breaches which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, it is not in breach of or
default with respect to any provision of any agreement, judgment, decree, order, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which it is a party or by
which it or any of its assets or properties are bound; and there does not exist any state of fact known to the Company which, with notice or lapse of time or both, would constitute an event of default
or breach on the part of the Company as provided in such documents, except such defaults which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 

        4.08    No Actions.    There are no legal or governmental actions, suits or proceedings pending or threatened in
writing to which the Company is a party or of which any property owned or leased by the Company is the subject, which actions, suits or proceedings, individually or in the aggregate, prevent or could
reasonably be expected to materially and adversely affect the transactions contemplated by this Agreement and/or the Warrant Agreement or to have a Material Adverse Effect; no material labor
disturbance by the employees of the Company exists or, to the best knowledge of the Company, is imminent; and the Company is not party to or subject to the provisions of any material injunction,
judgment, decree or order of any court, regulatory body, administrative agency or other governmental body. 

        4.09    No Material Change.    Except as set forth on Section 4.9 of the Disclosure Schedule, since
June 30, 2002, (i) the Company has not incurred any known material liabilities or obligations, indirect or contingent, or entered into any material verbal or written agreement or other
transaction which was not in the ordinary course of business or which could reasonably be expected to have a Material Adverse Effect; (ii) the Company has not sustained any material loss or
interference with its businesses or properties from fire, flood, windstorm, accident or other calamity not covered by insurance; (iii) the Company has not paid, made or declared any dividends
or other distribution with respect to its capital stock; (iv) there has not been any change in the capital stock of the Company or increase in indebtedness material to the Company; and
(v) the Company has not incurred or sustained any other event or change that could reasonably be expected to have a Material Adverse Effect. 

        4.010    Intellectual Property.    

        (a)  Except
as set forth on Section 4.10 of the Disclosure Schedule, the Company has ownership, license or legal right to use all material patent, copyright, trade
secret and trademark rights necessary to the conduct of the business of the Company as now conducted (collectively, "Intellectual Property"), other than intellectual property generally available on
commercial terms from other sources. 

        (b)  All
material licenses or other material agreements under which (i) the Company is granted rights in Intellectual Property, other than intellectual property
generally available on commercial terms from other sources, or (ii) the Company has granted rights to others in Intellectual Property owned or licensed by the Company, are in full force and
effect and there is no material default or breach thereof by the Company or, to the best knowledge of the Company, any other party thereto. 

        (c)  The
Company has taken all steps reasonably required in accordance with sound business practice and business judgment to establish and preserve its ownership of all
material patent, copyright, trade secret and other proprietary rights with respect to its operations, product developments, projects and technology. 

        (d)  The
business, activities and products of the Company do not materially infringe any intellectual property of any other person. The Company is not, to its best knowledge,
making unauthorized use of any confidential information or trade secrets of any other person. The activities of the Company and, to its best knowledge, any of its employees on behalf of the 

B-6

 

Company do not violate any material agreements or material arrangements which the Company has with other persons. 

        (e)  There
is not pending or, to the Company's best knowledge, threatened any claim, suit or action against the Company contesting or challenging the rights of the Company in
or to any Intellectual Property or the validity of any of the Intellectual Property. 

        (f)    To
the Company's best knowledge, there is no infringement upon or unauthorized use by any third party of any of the Intellectual Property. 

        4.011    Compliance.    The Company is in compliance in all material respects with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting its business. Except as set forth in Section 4.11 of the Disclosure Schedule, the business, activities and operations of the Company
are in
compliance in all material respects with the Good Manufacturing Practice regulations issued by the United States Food and Drug Administration. 

        4.012    Offering Materials.    The Company has not distributed and will not (unless requested by the Placement Agent
in writing) distribute prior to the Closing Date any offering material in connection with the Offering and sale of the Units other than the Memorandum. The Company has not in the past nor will it
hereafter take any action to sell, offer for sale or solicit offers to buy any securities of the Company which cause the offer, issuance or sale of the Units, as contemplated by this Agreement and the
Warrant Agreement to fail to qualify for the exemptions of Section 4 of the Securities Act. 

        4.013    Contributions.    The Company has not at any time, directly or indirectly, (i) made any unlawful
contribution to any candidate for public office or made and/or failed to disclose any contribution in violation of law or (ii) made any payment to any Federal or State governmental officer or
official, or other person charged with similar public or quasi-public duties, other than payments required or permitted by the laws of the United States or any jurisdiction thereof or any foreign
country. 

        4.014    Additional Information.    The information contained in the following documents does not include any untrue
statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made,
not misleading, as of their respective filing dates, or if amended, as so amended: 

        (a)  the
Company's Annual Report on Form 10-K, as amended by Amendment No. 1 to Form 10-K for the year ended December 31,
2001; 

        (b)  the
Company's Quarterly Reports on Form 10-Q for the periods ended March 31, 2002 and June 30, 2002, respectively; 

        (c)  Notice
of Annual Meeting of Shareholders and Proxy Statement for the Company's Annual Meeting held on June 17, 2002; 

        (d)  Notice
of Special Meeting of Stockholders and Proxy Statement for the Company's Special Meeting held on April 2, 2002; 

        (e)  Notice
of Special Meeting of Stockholders and Proxy Statement for the Company's Special Meeting held on October 28, 2002; 

        (f)    the
Company's Current Reports, on Form 8-K, filed on June 19, 2002, July 3, 2002, August 7, 2002 and September 10, 2002
(and with Dates of Reports of June 26, 2002, August 5, 2002 and September 9, 2002, respectively); 

        (g)  the
Memorandum, including all addenda and exhibits thereto; and 

        (h)  all
other documents, if any, filed by the Company with the Securities and Exchange Commission (the "Commission") since June 30, 2002 and prior to the date hereof
pursuant to 

B-7

 

the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). 

        The
forms, reports and documents described in paragraphs (a), (b), (c), (d), (e), (f), (g) and (h) of this Section 4.14, including any exhibits, annexes and
amendments thereto, being collectively the "SEC Reports". 

        4.015    Legal Opinion.    At the Closing, Pillsbury Winthrop LLP, counsel to the Company, will deliver its legal
opinion to the Placement Agent in the form attached hereto as Exhibit B. 

        4.016    Access to Intellectual Property Counsel.    Prior to the Closing, the Company shall use its reasonable best
efforts to afford the Placement Agent reasonable access to the Company's special counsel on intellectual property matters to discuss (i) any rights of parties other than the Company to any of
the Company's patents or patent applications, (ii) pending or threatened actions, suits, proceedings or claims by others challenging the Company's rights to or in any such patents or patent
applications and (iii) any pending or, to such counsel's best knowledge, threatened actions, suits, proceedings or claims by others that the Company is infringing or otherwise violating any
patent or trade secret rights of others. 

        4.017    Certificate.    At the Closing, the Company will deliver to the Purchaser a certificate executed by the
Chairman of the Board or President and the chief financial or accounting officer of the Company (solely in their respective capacities as such), dated the Closing Date, in form and substance
reasonably satisfactory to the Purchaser, to the effect that the representations and warranties of the Company set forth in this Section 4 were true and correct in all material respects (other
than representations and warranties that contain materiality or knowledge standards or qualifications, which representations and warranties shall be true and correct in all respects), as of the date
of this Agreement and that the Company has complied in all material respects with all the agreements and satisfied all the conditions herein on its part to be performed or satisfied on or prior to
such Closing Date. 

        4.018    Warrant Agreement.    At the Closing, the Company and the Warrant Agent shall have executed and delivered the
Warrant Agreement and made a copy thereof available to the Purchaser. 

        4.019    Reliance by Placement Agent.    The Company hereby acknowledges that the Placement Agent may rely on the
representations and warranties set forth in this Section 4 as if such representations and warranties were made to the Placement Agent directly. 

        4.020    No Material, Non-public Information.    At the time of the announcement of the transaction
contemplated by the Agreements, the Memorandum, as it may be amended or supplemented, will include no material non-public information with respect to the Company. 

        SECTION
5.    Representations, Warranties and Covenants of the Purchaser.    

        (a)  The
Purchaser represents and warrants to, and covenants with, the Company that: (i) the Purchaser is knowledgeable, sophisticated and experienced in making, and
is qualified to make, decisions with respect to investments representing an investment decision like that involved in the purchase of the Units and has requested, received, reviewed and considered all
information it deems relevant in making an informed decision to purchase the Units; (ii) the Purchaser is acquiring the number of Units set forth in Section 2 above in the ordinary
course of its business and for its own account for investment only and with no present intention of distributing any Unit Securities or any arrangement or understanding with any other persons
regarding the distribution of such Unit Securities (this representation and warranty not limiting the Purchaser's right to resell pursuant to the Registration Statements or, other than with respect to
any claims arising out of a breach of this representation and warranty, the Purchaser's right to indemnification under Section 7.3); (iii) the Purchaser will not, directly or 

B-8

 

indirectly, offer, sell, pledge, sell short, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Unit Securities except in
compliance with each of the Securities Act, the Exchange Act, the Rules and Regulations and the provisions hereof and all other applicable laws; (iv) the Purchaser has completed or caused to be
completed the Registration Statement Questionnaire attached hereto as part of Appendix I for use in preparation of the Registration Statements, and the answers thereto are true and correct as
of the date hereof and will be true and correct as of the effective date of the Registration Statements and the Purchaser will notify the Company immediately of any material change in any such
information provided in the Registration Statement Questionnaire occurring prior to the sale by it of all of the Unit Securities; (v) the Purchaser has, in connection with its decision to
purchase the number of Units set forth in Section 2 above, relied solely upon the representations and warranties of the Company contained herein; and (vi) the Purchaser is unaware of, is
in no way relying on, and did not become aware of the Offering through or as a result of, any form of general solicitation or general advertising including, without limitation, any article, notice,
advertisement or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, in connection with the Offering and sale of the Units and is not
subscribing for Units, and did not become aware of the Offering, through or as a result of any seminar
or meeting to which the Purchaser was invited by, or any solicitation of a subscription by, a person not previously known to the Purchaser in connection with investments in securities generally. 

        (b)  The
Purchaser understands that the Units are being offered and sold to it in reliance upon specific exemptions from the registration requirements of the Securities Act,
the Rules and Regulations and state securities laws and that the Company and the Placement Agent are relying upon the truth and accuracy of, and the Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments and agreements of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the
Units. 

        (c)  Until
the Company publicly announces that the Agreements have been entered into, the Purchaser agrees with the Placement Agent and the Company to keep strictly
confidential all information concerning this Agreement, the Memorandum and the transactions contemplated hereby and thereby. The Purchaser understands that the information contained in the Memorandum
is strictly confidential and proprietary to the Company and has been prepared, in large part, from the Company's publicly available documents and other information and is being submitted to the
Purchaser solely for such Purchaser's confidential use. The Purchaser agrees to use the information contained in the Memorandum solely for the purpose of evaluating a possible investment in the Units.
The Purchaser hereby acknowledges that it is prohibited from reproducing and/or distributing the Memorandum, this Agreement, the Warrant Agreement, or any other offering materials or other information
provided by the Company in connection with the Purchaser's consideration of its investment in the Company, in whole or in part, or divulging or discussing any of their contents to third parties.
Further, the Purchaser understands that the existence and nature of all conversations and presentations, if any, regarding the Company and this Offering must be kept strictly confidential. The
Purchaser understands that Federal securities laws impose restrictions on trading based on information regarding this Offering. In particular, the Purchaser hereby acknowledges that disclosure of
information regarding this Offering may cause the Company to violate Regulation FD and agrees not to engage in any such unauthorized disclosure. The restrictions in this subsection shall cease upon
the Company's public announcement that the Agreements have been entered into. 

B-9

 

        (d)  The
Purchaser understands that its investment in the Units involves a significant degree of risk and uncertainty and that the market price of the Common Stock has been
and may continue to be volatile and that no representation or warranty is being made as to the future value or trading volume of the Common Stock or the Warrants. In addition, the Purchaser
understands that, although the Company shall seek authorization for quotation of the Warrants on The Nasdaq Stock Market (or such other exchange or automated quotation system on which the Common Stock
is then traded or quoted), there is no assurance that such authorization would be obtained or, if obtained, that the criteria for quotation will remain satisfied by the Company thereafter. Moreover,
the Purchaser understands that there is no assurance that the Company will satisfy the criteria for continued quotation of the Common Stock on The Nasdaq Stock Market. The Purchaser has the knowledge
and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Units and has the ability to bear the full economic risks of an investment
in the Units. The Purchaser is not relying on the Company, the Placement Agent or any of their respective employees, representatives or agents with
respect to the legal, tax, economic and related considerations as to an investment in the Units, and the Purchaser has relied on the advice of, or has consulted with, only its own advisors. 

        (e)  The
Purchaser understands that no United States Federal or state agency or any other governmental agency has passed upon or made any recommendation or endorsement of any
of the Unit Securities. 

        (f)    The
Purchaser understands that, until such time as the Form S-3 Registration Statement (as defined in Section 7.1(a) hereof) has been declared
effective or the Unit Securities may be sold pursuant to Rule 144(k) under the Securities Act without any restriction as to the number of securities as of a particular date that can then be
immediately resold, the Unit Securities shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates
for the securities comprising the Unit Securities): 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE 144(K) UNDER SAID ACT.

        The
Purchaser also understands that, until such time as the shares of Common Stock comprising the Unit Securities may be sold in accordance with Section 5(h) hereof, such shares
of Common Stock also shall bear an additional restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for the
shares of Common Stock comprising the Unit Securities): 

THE TRANSFER OR SALE OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS OF A PURCHASE AGREEMENT, INCLUDING SECTION 5(H) THEREOF, DATED AS OF NOVEMBER
    , 2002, A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE COMPANY.

        (g)  The
Purchaser's principal executive office or residence is in the jurisdiction set forth immediately below the Purchaser's name on the signature page hereto. 

B-10

 

        (h)  The
Purchaser hereby covenants with the Company not to make any resale or other disposition of any of the Unit Securities without complying with the provisions of this
Agreement and the Warrant Agreement, and without effectively causing any prospectus delivery requirement under the Securities Act to be satisfied, and the Purchaser acknowledges and agrees that such
Unit Securities are not transferable on the books of the Company unless the certificate submitted to the transfer agent evidencing the Unit Securities is accompanied by a separate Purchaser's
Certificate of Subsequent Sale: (i) in the form of Appendix III hereto, (ii) executed by the Purchaser (if a natural person) or, if not, by an officer of, or other authorized
person expressly designated by, the Purchaser and (iii) to the effect that (A) the Unit Securities have been sold in accordance with the Registration Statements or a valid exemption from
registration under the Securities Act and any applicable State securities or "blue sky" laws and (B), if applicable, the requirement of delivering a current prospectus has been satisfied. 

        Notwithstanding
anything to the contrary contained in this Agreement, until the earlier of the date which is (i) two hundred and ten (210) days following the Closing Date
and (ii) ninety (90) days following the date on which the Commission declares effective the Form S-1 Registration Statement (as defined in Section 7.1(a)
hereof) (the earlier of (i) and (ii), the "Lock-Up Expiration Date"), the Purchaser shall not offer, sell, transfer or otherwise dispose of any shares of Common Stock comprising the
Unit Securities (but not including any shares of Common Stock which might be issued to the Purchaser upon exercise of the Warrants) owned by the Purchaser, except in connection with a sale, merger or
other disposition of the Company approved by the Company's Board of Directors; provided, however, that the Placement Agent may, in its sole discretion, upon written notice to the Purchaser and the
Other Purchasers permit the sale or other disposition of shares of Common Stock comprising the Unit Securities prior to the Lock-Up Expiration Date; provided, further, that any decision by
the Placement Agent to permit such a sale or other disposition by the Purchasers of shares of Common Stock comprising the Unit Securities prior to the Lock-Up Expiration Date shall be made
only in respect of all (but not less than all) shares of Common Stock comprising all of the Unit Securities sold in the Offering. Notwithstanding the foregoing sentence, the Purchaser may make
transfers to a Permitted Transferee (as defined below in this paragraph); provided, however, that such Permitted Transferees shall agree in writing (in
form and substance reasonably acceptable to the Company) to be subject to the provisions of this Section 5(h). The Purchaser acknowledges that there is no assurance that the
Form S-1 or Form S-3 Registration Statement shall be declared effective by the Commission by the respective Registration Deadline (as defined in
Section 7.1(d) hereof), if at all. "Permitted Transferee" shall mean (i) if the Purchaser is an individual, such Purchaser's spouse, children, grandchildren, nieces, nephews, siblings,
parents and adoptive children and step-children or any trust or family limited partnership established for the benefit of any of the foregoing persons and (ii) if the Purchaser is
an entity, such Purchaser's partners, stockholders or members. 

        Subject,
and in addition, to the preceding paragraph, the Purchaser hereby covenants with the Company not to make any resale or other disposition of any Unit Securities prior to such
time that the Registration Statements may become effective under the Securities Act unless (i) such sale is made pursuant to a valid exemption from registration under the Securities Act,
(ii) the transferee or assignee thereof shall agree in writing also to be bound by all of the provisions of this Agreement and the Warrant Agreement, (iii) the Purchaser agrees in
writing with the transferee or assignee to assign its rights under this Agreement and the Warrant Agreement and copies of such agreements are furnished to the Company after such assignment,
(iv) the Company is furnished with written notice of the name and address of such transferee or assignee, (v) the certificate submitted to the transfer agent evidencing the Unit
Securities is accompanied by a separate Purchaser's Certificate of Subsequent Sale: (a) in the form of Appendix III hereto, (b) executed by the Purchaser (if a natural person) or,
if not, by an officer of, or other authorized person expressly designated by, the Purchaser and (c) to the effect that the Unit Securities have been sold in accordance with a valid exemption
from registration under the 

B-11

 

Securities Act and any applicable State securities or "blue sky" laws, (vi) the Purchaser shall have complied with all applicable provisions of this Agreement and the Warrant Agreement
relating to any resale of any Unit Securities, (vii) following such transfer or assignment, the further disposition of such securities by the transferee or assignee is restricted under the
Securities Act and applicable state securities laws and (viii) if reasonably requested by the Company, the Purchaser shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company, that such disposition will not require registration of the Unit Securities under the Securities Act. For purposes of this subsection, the term "Unit Securities" shall be
deemed to include the shares of Common Stock issuable upon exercise of the Warrants. 

        The
Purchaser acknowledges that there may occasionally be times when the Company must suspend the use of the prospectus forming a part of either of the Registration Statements (a
"Suspension") until such time as an amendment to the Registration Statement has been filed by the Company and declared effective by the Commission, or until such time as the Company has filed an
appropriate report with the Commission pursuant to the Exchange Act or appropriately supplemented the prospectus forming a part of the Registration Statement. The Purchaser hereby covenants that it
will not sell any Unit Securities pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchaser written notice of the Suspension of the use of said
prospectus and ending at the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said prospectus, except as permitted in
Section 7.2(c) hereof; provided, however, that the Purchaser shall be in compliance with the provisions contained in Section 7.2(b) hereof, and provided further that the Company will use
its reasonable best efforts to cause the prospectus so suspended to be promptly resumed. 

        (i)    The
Purchaser further represents and warrants to, and covenants with, the Company that (i) the Purchaser has full right, power, authority and capacity to enter
into this Agreement and to consummate the transactions contemplated hereby and thereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement and the
Warrant Agreement, and (ii) upon the execution and delivery by the Purchaser of this Agreement, this Agreement shall constitute legal, valid and binding obligations of the Purchaser,
enforceable in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or
at law) and except as the indemnification agreements of the Purchaser contained in Section 7.3 hereof may be held violative of public policy and legally unenforceable. 

B-12

  

        (j)    The
Purchaser: (i) if a natural person, represents that the Purchaser has reached the age of 21 and has full power and authority to execute and deliver this
Agreement and all other related agreements or certificates and to carry out the provisions hereof and thereof; (ii) if a corporation, partnership, limited liability company or partnership,
association, joint stock company, trust, unincorporated organization or other entity, represents that such entity was not formed for the specific purpose of acquiring the Units, such entity is duly
organized, validly existing and in good standing under the laws of the state of its organization, the consummation of the transactions contemplated hereby is authorized by, and will not result in a
violation of state law or its charter or other organizational documents, such entity has full power and authority to execute and deliver this Agreement and all other related agreements or certificates
and to carry out the provisions hereof and thereof and to purchase and hold the securities constituting the Units, the execution and delivery of this Agreement has been duly authorized by all
necessary action, this Agreement has been duly executed and delivered on behalf of such entity and is a legal, valid and binding obligation of such entity; or (iii) if executing this Agreement
in a representative or fiduciary capacity, represents that it has full power and authority to execute and deliver this Agreement in such capacity and on behalf of the subscribing individual, ward,
partnership, trust, estate, corporation, limited liability company or limited liability partnership, or other entity for whom the Purchaser is executing this Agreement, which execution shall not
result in a violation of any document creating Purchaser's representative or fiduciary capacity, and such individual, ward, partnership, trust, estate, corporation, limited liability company or
partnership, or other entity has full right and power to perform pursuant to this Agreement and make an investment in the Company, and that this Agreement constitutes a legal, valid and binding
obligation of such entity. The execution, delivery and performance of this Agreement will not violate or be in conflict with any order, judgment, injunction, law, rule, regulation, agreement or
controlling document to which the Purchaser is a party or by which it is otherwise bound. 

        (k)  The
Purchaser hereby acknowledges that the Placement Agent may rely on the representations, warranties and covenants set forth in this Section 5 as if such
representations, warranties and covenants were made to the Placement Agent directly. 

        SECTION
6.    Survival of Representations, Warranties and Agreements.    Notwithstanding any investigation made by any
party to this Agreement or by the Placement Agent, all covenants, agreements, representations and warranties made by the Company and the Purchaser herein and in the certificates delivered pursuant
hereto shall survive the Closing, the delivery to the Purchaser of the Units being purchased and the payment therefor; provided, however, that the representations and warranties of the Company
contained in Section 4 hereof (other than Section 4.12, which shall survive indefinitely) shall terminate on October 31, 2003. 

        SECTION
7.    Registration of the Unit Securities; Listing of Warrants; Compliance with the Securities Act.    

        7.01    Registration Procedures.    The Company shall: 

        (a)  subject
to receipt by the Company of necessary information from the Purchasers, as promptly as practicable, but in no event later than the Filing Deadline (which, in
respect of the Form S-3 Registration Statement, shall mean three (3) business days after the Closing Date and, in respect of the Form S-1 Registration
Statement, shall mean ten (10) calendar days), file with the Commission a registration statement on Form S-3 (the "Form S-3 Registration Statement")
covering the resale by the Purchasers of the Unit Securities from time to time and (a registration statement on Form S-1 (the "Form S-1 Registration Statement"
and, collectively with the Form S-3 Registration Statement, the "Registration Statements") covering the sale by the Company of Common Stock and, in the case of the 

B-13

 

Class A Warrants, the Class B Warrants to subsequent purchasers of such Warrants upon the exercise thereof, which Registration Statements, to the extent allowable under the Securities
Act, shall state that such Registration Statements also cover such indeterminate number of additional shares of Common Stock as may become issuable upon exercise of the Warrants to prevent dilution
resulting from stock splits, stock dividends or similar transactions; 

        (b)  provide
the Registration Statements (and each amendment or supplement thereto, and each request for acceleration of effectiveness thereof) to the Placement Agent and its
counsel for their review at least two (2) business days prior to the filing or other submission of such Registration Statements; 

        (c)  use
its reasonable best efforts, subject to receipt of any necessary information from the Purchasers, to cause the Commission to declare the Registration Statements
effective as soon as practicable and in any event, (i) in respect of the Form S-3 Registration Statement, within sixty (60) days and (ii) in respect of the
Form S-1 Registration Statement, within one hundred twenty (120) days of the Closing Date (the "Registration Deadline"); 

        (d)  if
either Registration Statement is not filed by the Company with the Commission by the Filing Deadline and/or if either Registration Statement is not declared effective
by the Commission on or before the Registration Deadline substantially due to action or inaction on the part of the Company in violation of Section 7.1(a) and/or Section 7.1(c), as
applicable, make payments to the Purchasers in such amounts and at such times as shall be determined as follows as relief for the damages to the Purchasers by reason of any such delay in or reduction
of their ability to sell and/or exercise the Unit Securities (which remedy shall not be exclusive of any other remedies available at law or in equity): the Company shall pay to each Purchaser an
amount equal to (i) the aggregate purchase price paid by the Purchaser for its purchase of Units, multiplied by (ii) one percent (1%) (with respect to the period commencing on the Filing
Deadline or the Registration Deadline, as applicable; provided, that such percentage shall increase to and remain at one and one-half percent (1.5%) for all calculations to the extent that
such calculations apply to time periods after the sixtieth (60th) day after the Filing Deadline
or the Registration Deadline, as applicable), multiplied by (iii) the sum of (x) the quotient calculated by dividing (A) the number of days after the Filing Deadline such
Registration Statement is filed with the Commission by (B) fifteen (15), plus (y) the quotient calculated by dividing (A) the number of days after the Registration Deadline and
prior to the date such Registration Statement is declared effective by the Commission by (B) fifteen (15); 

        (e)  promptly
prepare and file with the Commission such amendments and supplements to the Registration Statements and the prospectuses used in connection therewith as may be
necessary to keep the Registration Statements effective and in compliance with applicable securities laws until, (i) in respect of the Form S-3 Registration Statement, the
earlier of the date (x) as of which all Unit Securities owned by the Purchasers shall have been resold and (y) on which the Unit Securities may be resold by non-affiliates of
the Company without registration by reason of Rule 144(k) under the Securities Act or any other rule of similar effect and (ii) in respect of the Form S-1 Registration
Statement, the earlier of the date (x) as of which all Warrants owned by the Purchasers shall have been exercised and (y) ten (10) years following the Closing Date; 

        (f)    furnish
to the Purchaser with respect to the securities registered under the Registration Statements such number of copies of prospectuses and such other documents as
the Purchaser may reasonably request, in order to facilitate the public sale or other disposition of all or any of the Unit Securities by the Purchaser; provided,
however, that the obligation of the Company to deliver copies of prospectuses to the Purchaser shall be subject to the receipt by the Company of reasonable assurances from the
Purchaser that the Purchaser will comply 

B-14

 

with the applicable provisions of the Securities Act and of such State securities or "blue sky" laws as may be applicable in connection with any use of such prospectuses, and the resale of the Unit
Securities; 

        (g)  file
documents required of the Company for any "blue sky" clearance in states specified in writing by the Purchaser and keep such qualification or registration in effect
for as long as the Registration Statements are in effect; provided, however, that the Company shall not be required to qualify to do business or consent
to service of process in any jurisdiction in which it is not now so qualified or has not so consented; 

        (h)  file
all reports required to be filed with the Commission pursuant to the Exchange Act, and shall not terminate its status as an issuer required to file reports under
the Exchange Act even if the Exchange Act or the rules and regulations thereunder would permit such termination; 

        (i)    advise
the Purchaser, promptly after it shall receive notice or obtain knowledge of the issuance of any stop order by the Commission delaying or suspending the
effectiveness of either Registration Statement or of the initiation of any proceeding for that purpose; and it will promptly use its reasonable efforts to prevent the issuance of any stop order or to
obtain its withdrawal at the earliest practicable time if such stop order should be issued; and 

        (j)    bear
all expenses in connection with the procedures in subsections (a) through (i) of this Section 7.1 and the registration of the resale and/or
exercise of the Unit Securities pursuant to the Registration Statements, other than fees and expenses, if any, of counsel or other advisers to the Purchaser or the Other Purchasers or underwriting
discounts, brokerage fees and commissions incurred by the Purchaser or the Other Purchasers, if any. 

        The
Company understands that the Purchaser hereby disclaims being an underwriter, but, notwithstanding the Purchaser nonetheless being deemed an underwriter, shall not, subject to the
Purchaser's compliance with applicable law and this Agreement and the Warrant Agreement, relieve the Company of any obligations it has hereunder. The Registration Statement to be filed by the Company
are available free of charge upon request and a questionnaire to be completed by the Purchaser is attached hereto as Appendix I. 

        7.02    Listing of Warrants; Transfer of Unit Securities Before and After Effectiveness of the Registration
Statements.    

        (a)  The
Company shall use its reasonable efforts to cause the listing on The Nasdaq Stock Market (or such other exchange or automated quotation system on which the Common
Stock is then traded or quoted) of all Warrants and additional shares of Common Stock (including shares of Common Stock underlying the Warrants) covered by the Registration Statements within sixty
(60) days after the date of this Agreement. The Company shall bear all expenses in connection with the listing of such Unit Securities on The Nasdaq Stock Market. 

        (b)  The
Purchaser agrees that it will not effect any resale or other disposition of any Unit Securities or its right to purchase Unit Securities that would constitute a sale
within the meaning of the Securities Act unless the Purchaser effects such resale or other disposition in accordance with Section 5(h) hereof. If the Purchaser continues to hold any of the Unit
Securities after a Registration Statement shall become effective, the Purchaser will promptly notify the Company in writing of any changes or additions to the information set forth in such
Registration Statement regarding the Purchaser or its plan of distribution or disposition. The foregoing obligation shall cease when the Purchaser shall have disposed of all of its Unit Securities. 

B-15

 

        (c)  Notwithstanding
any other provisions of this Agreement or the Warrant Agreement, the Purchaser shall not be prohibited from selling securities under the Registration
Statements as a result of Suspensions on more than two occasions of not more than 20 days each in any 12-month period, unless, in the good faith judgment of the Company's Board of
Directors, upon advice of counsel, the sale of
Unit Securities under a Registration Statement in reliance on this paragraph would be likely to cause a violation of the Securities Act or the Exchange Act and result in liability to the Company. 

        7.03    Indemnification. For the purpose of this Section 7.3:    

	(i)
	the
term "Purchaser/Affiliate" shall mean any affiliate of the Purchaser and any person who controls the Purchaser or any affiliate of the Purchaser
within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act; and

	(ii)
	the
term "Registration Statements" shall include any final prospectus, exhibit, supplement or amendment included in or relating to, and any document
incorporated by reference in, the Registration Statements. 

        (a)  The
Company agrees to indemnify and hold harmless, and pay and/or reimburse, each of the Purchasers and each Purchaser/Affiliate, against any losses, claims, damages,
liabilities or expenses, to which such Purchasers or such Purchaser/Affiliates may become subject, under the Securities Act, the Exchange Act, or any other Federal or state law or regulation, at
common law or otherwise (including in settlement of any claims or litigation, if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in either
of the Registration Statements, as amended at the time of effectiveness of the Registration Statements, including any information deemed to be a part thereof as of the time of effectiveness pursuant
to paragraph (b) of Rule 430A, or pursuant to Rule 434, of the Rules and Regulations, or the prospectus, in the form first filed with the Commission pursuant to Rule 424(b)
of the Rules and Regulations, or filed as part of either of the Registration Statements at the time of effectiveness if no Rule 424(b) filing is required (the "Prospectus"), or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in the
Registration Statement or any amendment or supplement thereto not misleading or in the Prospectus or any amendment or supplement thereto not misleading in the light of the circumstances under which
they were made, or arise out of or are based in whole or in part on any material inaccuracy in the representations and warranties of the Company contained in this Agreement or the Warrant Agreement,
or any failure of the Company to perform in all material respects its obligations hereunder or under law, and will reimburse each Purchaser and each such Purchaser/Affiliate for any legal and other
expenses as such expenses are reasonably incurred by such Purchaser or such Purchaser/Affiliate in connection with investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is
based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission made in either of the Registration Statements, the Prospectus or any amendment or supplement
thereto in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Purchaser expressly for use therein, (ii) the failure of such Purchaser to
comply with the covenants and agreements contained in this Agreement (including, without limitation, Sections 5(h) and 7.2(b) 

B-16

 

hereof in respect of the resale of Unit Securities) or the Warrant Agreement or to perform its obligations under law, (iii) the inaccuracy of any representations or warranties made by such
Purchaser in this Agreement or (iv) any statement or omission in any Prospectus or any amendment or supplement thereto that is corrected in any subsequent Prospectus or any amendment or
supplement thereto that was delivered to the Purchaser reasonably prior to the pertinent sale or sales by the Purchaser. 

        (b)  Each
Purchaser will severally, but not jointly, indemnify and hold harmless, and pay and/or reimburse, the Company, each of its directors, each of its officers who
signed a Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, against any
losses, claims, damages, liabilities or expenses to which the Company, each of its directors, each of its officers who signed a Registration Statement or controlling person may become subject, under
the Securities Act, the Exchange Act, or any other Federal or state law or regulation, at common law or otherwise (including in settlement of any claim or litigation, if such settlement is effected
with the written consent of such Purchaser), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon
(i) any failure by the Purchaser to comply with the covenants and agreements contained in this Agreement (including Sections 5(h) and 7.2 (b) hereof in respect of the resale of Unit
Securities) or the Warrant Agreement or to perform its obligations under law, (ii) the inaccuracy of any representations or warranties made by such Purchaser herein or (iii) any untrue
or alleged untrue statement of any material fact contained in a Registration Statement, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein or necessary to make the statements in a Registration Statement or any amendment or supplement thereto not misleading or
in the Prospectus or any amendment or supplement thereto not misleading in the light of the circumstances under which they were made, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was made in a Registration Statement, the Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by the Purchaser expressly for use therein, and will reimburse the Company, each of its directors, each of its officers who signed a
Registration Statement or controlling person for any legal and other expense reasonably incurred by the Company, each of its directors, each of its officers who signed the Registration Statement or
controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action. Notwithstanding any other provisions of
this Section 7.3(b), no Purchaser shall be required to indemnify any party in excess of the gross proceeds paid by such Purchaser for Units purchased pursuant to its respective Agreement or if
the Purchaser shall resell Unit Securities pursuant to a Registration Statement, if greater, the net proceeds received by the Purchaser from those resales. 

        (c)  Promptly
after receipt by an indemnified party under this Section 7.3 of notice of the threat or commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this Section 7.3, promptly notify the indemnifying party in writing thereof; however, the failure to notify the
indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise under this Section 7.3 to the extent the indemnifying party is
not prejudiced as a result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party,
the indemnifying party will be entitled to 

B-17

 

participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such
indemnified party and, after notice from the Indemnifying Party to the Indemnified Party of its election to assume the defense thereof, the Indemnifying Party shall not be liable to such Indemnifed
Party for any fees of counsel or any other expenses, in each case subsequently incurred by such Indemnified Party in connection with the defense thereof; provided, however, if the defendants in any
such action include both the indemnified party and the indemnifying party and, based upon the advice of such indemnified party's counsel, the indemnified party shall have reasonably concluded that
there may be a conflict of interest between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available
to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. 

        If
the indemnifying party elects to compromise or defend an asserted liability, it shall promptly, but in any event within ten (10) days (or sooner, if the nature of the asserted
liability so requires), notify the indemnified party of its intent to do so, and the indemnified party shall reasonably cooperate, at the request and reasonable expense of the indemnifying party, in
the compromise of, or defense against, such asserted liability. The indemnifying party will not be released from any obligation to indemnify the indemnified party hereunder with respect to a claim
without the prior written consent of the indemnified party, unless the indemnifying party delivers to the indemnified party a duly executed agreement settling or compromising such claim with no
monetary liability to or injunctive relief against the indemnified party and a complete release of the indemnified party with respect thereto. The indemnifying party shall have the right, except as
provided below in this subsection, to conduct and control the defense of any third-party claim made for which it has been provided notice hereunder. Upon receipt of written notice from the
indemnifying party to such indemnified party of its election so to assume the defense of such action and reasonable approval by the indemnified party of counsel, the indemnifying party will not be
liable to such indemnified party under this Section 7.3 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless
(i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with the proviso to the preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, representing the indemnified parties who are parties to such action, plus local counsel, if
appropriate) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after
notice of commencement of action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying party. 

        (d)  If
the indemnification provided for in this Section 7.3 is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold
harmless an indemnified party under subsections (a) or (b) of this Section 7.3 in respect of any losses, claims, damages, liabilities or expenses referred to herein, then each
applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein
(i) in such proportion as is appropriate to reflect the relative economic benefits received by the Company and the Purchaser from the placement of the Units contemplated by this Agreement or
(ii) if the allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but the relative fault of the Company and the 

B-18

 

Purchaser in connection with the statements or omissions or inaccuracies in the representations and warranties in this Agreement or the Warrant Agreement that resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and each Purchaser, on the other, shall be
deemed to be in the same proportion as the amount paid by such Purchaser to the Company pursuant to this Agreement for the Unit Securities purchased by such Purchaser that are resold pursuant to the
Registration Statement bears to the difference (the "Difference"), if any, between the amount such Purchaser paid for the Unit Securities, that are sold pursuant to a Registration Statement and the
amount received by such Purchaser from such resale. The relative fault of the Company, on the one hand, and each Purchaser, on the other, shall be determined by reference to, among other things,
whether the untrue or alleged statement of a material fact or the omission or alleged omission to state a material fact or the inaccurate or the alleged inaccurate representation and/or warranty
relates to information supplied by the Company or by such Purchaser and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission
and/or its distribution. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the
limitations set forth in subsection (c) of this Section 7.3, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any
action or claim. The provisions set forth in subsection (c) of this Section 7.3 with respect to the notice of the threat or commencement of any action shall apply if a claim for
contribution is to be made under this subsection (d); provided, however, that no additional notice shall be required with respect to any threat or action for which notice has been given under
subsection (c) for purposes of indemnification. The Company and the Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 7.3 were determined
solely by pro rata allocation (even if the Purchaser were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations
referred to in this paragraph. Notwithstanding the provisions of this Section 7.3, no Purchaser shall be required to contribute any amount in excess of the amount by which the Difference
exceeds the amount of any damages that such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Purchasers' obligations to contribute pursuant to this Section 7.3 are several and not joint. 

        7.04    Termination of Conditions and Obligations.    The restrictions imposed by Section 5(h) hereof and this
Section 7 upon the transferability of the Unit Securities shall cease and terminate as to any particular number of the Unit Securities upon the passage of two (2) years from the date of
their issuances or at such time as an opinion of counsel reasonably satisfactory in form and substance to the Company shall have been rendered to the effect that such conditions are not necessary in
order to comply with the Securities Act; provided, however, that in respect of the shares of Common Stock underlying the Warrants such restrictions
shall cease and terminate upon the passage of two (2) years from the date of the exercises of the Warrants; provided, further, that in respect of
the Class B Warrants such restrictions shall cease and terminate upon the passage of two (2) years from the date of their issuances. 

B-19

 

        7.05    Information Available.    So long as a Registration Statement is effective covering the resale of Unit
Securities owned by the Purchaser, the Company will furnish or otherwise make available to the Purchaser: 

        (a)  as
soon as practicable after available one copy of (i) its Annual Report to Stockholders (which Annual Report shall contain financial statements audited in
accordance with U.S. generally accepted accounting principles by a national firm of certified public accountants), (ii) if not included in substance in the Annual Report to Stockholders, upon
the request of the Purchaser, its Annual Report on Form 10-K, (iii) upon the request of the Purchaser, its Quarterly Reports on Form 10-Q, (iv) upon
the request of the Purchaser, its Current Reports on Form 8-K, (v) upon the request of the Purchaser, its Notice of Annual Meeting of Shareholders and proxy statement for the
Company's annual meeting and (vi) a full copy of the particular Registration Statement covering the Unit Securities (the foregoing, in each case, excluding exhibits); 

        (b)  upon
the request of the Purchaser, all exhibits in the form filed with the Commission excluded by the parenthetical to Section 7.5(a)(vi); and 

        (c)  upon
the request of the Purchaser, a reasonable number of copies of the prospectuses to supply to any other party requiring such prospectuses; 

and
the Company, upon the reasonable request of the Purchaser, will meet with the Purchaser or a representative thereof at the Company's headquarters to discuss information relevant for disclosure in
such Registration Statement covering the Unit Securities and will otherwise reasonably cooperate with any Purchaser conducting an investigation for the purpose of reducing such Purchaser's exposure to
liability under the Securities Act, including the reasonable production of information at the Company's headquarters during normal business hours, subject to appropriate confidentiality limitations. 

        7.6    Compliance with the Sarbanes-Oxley Act of 2002.    The Company shall comply with all applicable requirements
and prohibitions under the Sarbanes-Oxley Act of 2002. 

        SECTION
8.    Broker's Fee.    The Purchaser acknowledges that the Company intends to pay to the Placement Agent fees
in respect of the sale of the Units to the Purchaser. Each of the parties hereby represents that, on the basis of any actions and agreements by it, there are no other brokers or finders entitled to
compensation in connection with the sale of the Units to the Purchaser. 

        SECTION
9.    Notices.    All notices, requests, consents and other communications hereunder shall be in writing,
shall be mailed by first-class registered or certified mail, confirmed facsimile or nationally
recognized overnight express courier postage prepaid, and shall be deemed given when so mailed and shall be delivered as addressed as follows: 

	

(a)	
 	

if to the Company, to:

The Immune Response Corporation

5935 Darwin Court

Carlsbad, California 92008

Attention: President

Facsimile: (760) 431-8636

with a copy to:

Pillsbury Winthrop LLP

50 Fremont Street

San Francisco, CA 94105-2228

Attention: P. Joseph Campisi, Jr., Esq.

Facsimile: (415) 983-1200

B-20

 

        or
to such other person at such other place as the Company shall designate to the Purchaser in writing; and 

        (b)  if
to the Purchaser, at its address as set forth at the end of this Agreement, or at such other address or addresses as may have been furnished to the Company in
writing. 

        SECTION
10.    Changes.    This Agreement may not be modified or amended except pursuant to an instrument in writing
signed by both the Company and the Purchaser. 

        SECTION
11.    Headings.    The headings of the various sections of this Agreement have been inserted for convenience
of reference only and shall not be deemed to be part of this Agreement. 

        SECTION
12.    Severability.    In case any provision contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. 

        SECTION
13.    Governing Law.    This Agreement shall be governed by and construed in accordance with the laws of the
State of New York. 

        SECTION
14.    Counterparts.    This Agreement may be executed in two or more counterparts, each of which shall
constitute an original, and all of which, when taken together, shall constitute one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and
delivered to the other parties. Facsimile signatures shall be deemed original signatures. 

        SECTION
15.    Entire Agreement.    This Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Purchaser makes any
representation, warranty, covenant or undertaking with respect to any such matters. 

        SECTION
16.    Third Party Beneficiaries.    Subject to Section 7.3 hereof, this Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person. Notwithstanding the
foregoing, the Placement Agent may rely on the representations, warranties and covenants made in Sections 4 and 5 hereof as if such representations, warranties and covenants were made to the Placement
Agent directly. 

        SECTION
17.    Interpretation.    The use herein of the masculine, feminine or neuter forms shall also denote the
other forms, as in each case the context may require. 

        SECTION
18.    Confidential Disclosure Agreement.    Notwithstanding any provision of this Agreement to the contrary,
any confidential disclosure agreement previously executed by the Company and the Purchaser in connection with the transactions contemplated by this Agreement shall remain in full force and effect in
accordance with its terms following the execution of this Agreement and the consummation of the transactions contemplated hereby. 

        SECTION
19.    Assignment.    This Agreement and rights of the Purchaser hereunder may be assigned by the Purchaser
only with the prior written consent of the Company except such consent shall not be required in cases of assignments (x) by operation of the law; (y) by the Purchaser to a wholly-owned
subsidiary or to its partners or members; or (z) by an investment adviser to a fund for which it is the adviser or by or among funds that are under common control;  provided, that, in any such case,
such assignee agrees in writing to be bound by the terms of this Agreement. 

        SECTION
20.    Publicity.    The Company will not issue any public statement, press release or any other public
disclosure, that includes the Purchaser's name, without the Purchaser's prior written consent, subject to the next sentence. If the Company is required by an applicable law, resolution, or Exchange
Act rule to disclose the Purchaser's name, the Company will give the Purchaser reasonable notice of the required disclosure. 

B-21

 

        IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written. 

	 	 	THE IMMUNE RESPONSE CORPORATION
	

 	
 	

By:	

    
 Name:

Title:

	

Print or Type:	
 	

Name of Purchaser (Individual or Institution):

    

	

 	
 	

Number of Units Purchaser Elects to Purchase at a Price of $100,000 per Unit:
	 	 	    
	 	Units	 	 
	

 	
 	

Aggregate Purchase Price:
	 	 	    
	 	Units × $100,000 Unit Price $	 	    

	

 	
 	

Name of Individual Representing Purchaser (if an Institution):

    

	

 	
 	

Title of Individual Representing Purchaser (if an Institution):

    

	

Signature by:	
 	

Individual Purchaser, or Individual Representing Purchaser:

    

	

 	
 	

Address:	
 	

    
    
    

	 	 	Telephone:	 	    

	 	 	Facsimile:	 	    

B-22

  

APPENDIX I  

 
 

THE IMMUNE RESPONSE CORPORATION    

 
 

STOCK AND WARRANT CERTIFICATE QUESTIONNAIRE

        Pursuant
to Section 3 of the Agreement, please provide us with the following information: 

	

1.	
 	

The exact name that your Unit Securities are to be registered in (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 Unit Securities and the Registered Holder listed in response to item 1 above:	
 	

 
	 	 	 	 	

	

3.	
 	

The mailing address of the Registered Holder listed in response to item 1 above:	
 	

 
	 	 	 	 	

	 	 	 	 	

	 	 	 	 	

	 	 	 	 	

	

4.	
 	

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

 
	 	 	 	 	

Appendix I-1

 
APPENDIX I

(continued)  

 
 

THE IMMUNE RESPONSE CORPORATION    

 
 

REGISTRATION STATEMENT QUESTIONNAIRE    
  

        In connection with the preparation of the Registration Statements, please provide us with the following information: 

	1.
	In
connection with the Registration Statements, please state your or your organization's name exactly as it should appear in the Registration Statements: 

	2.
	Please
provide the number of Unit Securities that you or your organization will own immediately after Closing, including those Unit Securities purchased by you or your organization
pursuant to this Purchase Agreement and those shares purchased by you or your organization through other transactions: 

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

	 	 	          Yes                  No
	

 	
 	

If yes, please indicate the nature of any such relationships below:	
 	

 
	

 	
 	

	
 	

 
	

 	
 	

	
 	

 
	

 	
 	

	
 	

 

	4.
	Are
you (i) an NASD Member (see definition below), (ii) a Controlling (see definition below) shareholder of an NASD Member, (iii) a Person Associated with a Member
of the NASD (see definition below), or (iv) an Underwriter or a Related Person (see definition below) with respect to the proposed Offering; or (b) do you own any shares or other
securities of any NASD Member not purchased in the open market; or (c) have you made any outstanding subordinated loans to any NASD Member? 

	 	 	          Yes                  No
	

 	
 	

If "yes," please below:	
 	

 
	

 	
 	

	
 	

 
	

 	
 	

	
 	

 
	

 	
 	

	
 	

 

Appendix I-2

 
APPENDIX I

(continued)  

 
 

THE IMMUNE RESPONSE CORPORATION    

 
 

GLOSSARY OF TERMS    
  

        NASD Member. The term "NASD member" means either any broker or dealer admitted to membership in the National Association of Securities
Dealers, Inc. ("NASD"). (NASD Manual, By-laws Article I, Definitions) 

        Control. The term "control" (including the terms "controlling," "controlled by" and "under common control with") means the possession,
direct or indirect, of the power, either individually or with others, to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities,
by contract, or otherwise. (Rule 405 under the Securities Act of 1933, as amended) 

        Person Associated with a member of the NASD. The term "person associated with a member of the NASD" means every sole proprietor, partner,
officer, director, branch manager or executive representative of any NASD Member, or any natural person occupying a similar status or performing similar functions, or any natural person engaged in the
investment banking or securities business who is directly or indirectly controlling or controlled by a NASD Member, whether or not such person is registered or exempt from registration with the NASD
pursuant to its bylaws. (NASD Manual, By-laws Article I, Definitions) 

        Underwriter or a Related Person. The term "underwriter or a related person" means, with respect to a proposed offering, underwriters,
underwriters' counsel, financial consultants and advisors, finders, members of the selling or distribution group, and any and all other persons associated with or related to any of such persons. (NASD
Interpretation) 

Appendix I-3

  

APPENDIX II  

 
 

Accredited Investor Certification
  Initial the appropriate item(s)    
  

        The undersigned further represents and warrants as indicated below by the undersigned's
initials:

        A.    Individual investors:    (Please initial one or more of the
following five statements)

	1.
	            
I certify that I am an accredited investor because I have had individual income (exclusive of any income earned by my spouse) in excess of
$200,000 in each of the most recent two years and I reasonably expect to have an individual income in excess of $200,000 for the current year.

	2.
	            
I certify that I am an accredited investor because I have had joint income with my spouse in excess of $300,000 in each of the most recent
two years and I reasonably expect to have joint income with my spouse in excess of $300,000 for the current year.

	3.
	            
I certify that I am an accredited investor because I have an individual net worth, or my spouse and I have a joint net worth, in excess of
$1,000,000.

	4.
	            
I am a director or executive officer of The Immune Response Corporation

	5.
	            
I have individual net worth or my spouse and I have joint net worth of over $5,000,000. 

        B.    Partnerships, corporations, trusts or other entities:    (Please
initial one of the following seven statements). The undersigned hereby certifies that it is an accredited investor because it is:

	1.
	            
an employee benefit plan whose total assets exceed $5,000,000;

	2.
	            
an employee benefit plan whose investments decisions are made by a plan fiduciary which is either a bank, savings and loan association or
an insurance company (as defined in Section 3(a) of the Securities Act) or an investment adviser registered as such under the Investment Advisers Act of 1940;

	3.
	            
a self-directed employee benefit plan, including an Individual Retirement Account, with investment decisions made solely by
persons that are accredited investors;

	4.
	            
an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, not formed for the specific purpose
of acquiring the Units, whose total assets are in excess of $5,000,000;

	5.
	            
a corporation, partnership or Massachusetts or similar business trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Units and whose purchase is directed by a sophisticated person as described in Rule 506(b)(ii) of Regulation D and who has such knowledge and
experience in financial and business matters that he is capable of evaluating the risks and merits of an investment in the Units;

	6.
	            
a trust, not formed for the specific purpose of acquiring the Units, with total assets in excess of $5,000,000, whose purchase is directed
by a person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Units; or

	7.
	            
an entity (including a revocable grantor trust but other than a conventional trust) in which each of the above equity owners qualifies as
an accredited investor under items A(1), (2) or (3) or item B(1) above. 

Appendix II-1

  

APPENDIX II

(continued)  

 
 

Investor Profile
  (Must be completed by Investor)
  Section A—Personal Investor Information    
  

	Investor Name(s):	 
	 	

	

Individual executing Profile or Trustee:
	

	

Social Security Numbers / Federal I.D. Number:
	

	Date of Birth:	 	

	

Marital Status:	
 	

	

Joint Party Date of Birth:	
 	

	

Investment Experience (Years):	
 	

	

Annual Income:	
 	

	

Liquid Net Worth:	
 	

	

Net Worth:	
 	

	

Investment Objectives:

(circle one or more)	
 	

Long Term Capital Appreciation, Short Term Trading, Income Businessman's Risk, Safety of Principal, Tax Exempt Income or other
	

Home Street Address:	
 	

 
	

	Home City, State & Zip Code:	 	

	

Home Phone:	
 	

	
 	

Home Fax:	
 	

	
 	

Home Email:	
 	

	

	

Employer:	
 	

	

Employer Street Address:	
 	

	

Employer City, State & Zip Code:	
 	

	

Business Phone:	
 	

	
 	

Bus. Fax:	
 	

	
 	

Business Email:	
 	

	

Type of Business:	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

	

Spencer Trask Account Executive / Outside Broker/Dealer:	
 	

 
 

Section B—Certificate Delivery Instructions

          Please
deposit Certificate in my Spencer Trask Account #                     

          Please
open a Spencer Trask account and subsequently deposit my certificate in it 

          Please
deliver certificate to the Employer Address listed in Section A 

Appendix II-2

 

          Please
deliver certificate to the Home Address listed in Section A 

          Please
deliver certificate to the following address:                               

 
 

Section C—Form of Payment—Check or Wire Transfer

          Check
payable to "Citibank Private Bank, Escrow Agent for The Immune Response Corporation

          Wire
funds from my outside account according to the following: 

CITIBANK,
NA

ABA# 021000089

ATTN: PBID Custody Concentration Account

A/C:

F/F/C to: A/C#                

A/C Name: 

          Wire
funds from my Spencer Trask Account—See Following Page 

          Funds
for this investment are rolled over, tax deferred from                          within the allowable 60-day window

        Please check if you are a NASD member, or affiliate of a NASD member firm:                  

	
	 	

	Investor Signature	 	Date

Appendix II-3

  

APPENDIX II

(continued)  

 
 

Memorandum
  Wire Transfer Authorization    
  

	TO:	 	Lydia Soler—Operations Manager

Spencer Trask Ventures, Inc.	 	 
	

RE:	
 	

Client Wire Transfer Authorization

The Immune Response Corporation	
 	

 
	

DATE:	
 	

    
	
 	

 

This
memorandum authorizes the transfer of the following listed funds from my Spencer Trask Brokerage Account as follows: 

	Spencer Trask Brokerage Account #	 	    

	

Wire Amount	
 	

$    

	To:	 	CITIBANK, NA

ABA# 021000089

ATTN: PBID Custody Concentration Account

A/C:

F/F/C to: A/C#                                     

A/C Name: The Immune Response Corporation
	

 	
 	
REFERENCE:

SUBSCRIBER LEGAL NAME

    

TAX ID NUMBER

    

SUBSCRIBER ADDRESS

    

	FBO:	 	    

	Investment Title:	 	    

	Signature:	 	    

	Signature:	 	    
 (Joint Signature)

Appendix II-4

  

APPENDIX III  

Attention: 

 
 

PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE    
  

The
undersigned, [an officer of, or other person duly authorized by] 

	    
	 	hereby certifies
	[fill in official name of individual or institution]	 	 

that
he/she [said institution] is the Purchaser of the shares or warrants evidenced by the attached certificate, 

	and as such, sold such shares on	 
	in accordance with [Registration Statement
	 	[date]	 

	number 333-	 
	 	] [a valid exemption (i.e.,	 
	 	) from

registration
under the Securities Act of 1933, as amended, and any applicable State securities or "blue sky" laws] and any requirement of delivering a current prospectus by the Company has
been complied with in connection with such sale. 

Print or Type:

	Name of Purchaser
 (Individual or Institution):	 	    

	
Name of Individual Representing Purchaser (if an Institution):	
 	

    

	
Title of Individual Representing Purchaser (if an Institution):	
 	

    

	
Signature by Individual Purchaser, or Representative of Purchaser:	
 	

    

Appendix III-1

QuickLinks

SUMMARY INSTRUCTION SHEET FOR PURCHASER (to be read in conjunction with the entire Purchase Agreement which follows)

PURCHASE AGREEMENT

THE IMMUNE RESPONSE CORPORATION

STOCK AND WARRANT CERTIFICATE QUESTIONNAIRE

THE IMMUNE RESPONSE CORPORATION

REGISTRATION STATEMENT QUESTIONNAIRE

THE IMMUNE RESPONSE CORPORATION

GLOSSARY OF TERMS

Accredited Investor Certification Initial the appropriate item(s)

Investor Profile ( Must be completed by Investor) Section A—Personal Investor Information

Section B—Certificate Delivery Instructions

Section C—Form of Payment—Check or Wire Transfer

Memorandum Wire Transfer Authorization

PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE

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