Document:

Exhibit 10.146

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration
Rights Agreement (this “Agreement”) is made and entered into as of
October 10, 2003, by and among The Immune Response Corporation, a Delaware
corporation (the “Company”), and the investors signatory hereto (each a
“Purchaser” and collectively, the “Purchasers”).

 

This Agreement is
made pursuant to the Securities Purchase Agreement, dated as of the date hereof
among the Company and the Purchasers (the “Purchase Agreement”).

 

The Company and
the Purchasers hereby agree as follows:

 

1.             Definitions.  Capitalized terms used and not otherwise
defined herein that are defined in the Purchase Agreement shall have the
meanings given such terms in the Purchase Agreement.  As used in this Agreement, the following terms shall have the
following meanings:

 

“Effectiveness
Date” means, with respect to the Registration Statement required to be
filed hereunder, the earlier of (a) the 90th calendar day following the Closing
Date (120th calendar day in the event of a full review by the
Commission) and (b) the fifth Trading Day following the date on which the
Company is notified by the Commission that the Registration Statement will not
be reviewed or is no longer subject to further review and comments.

 

“Effectiveness
Period” shall have the meaning set forth in Section 2(a).

 

“Filing Date”
means, with respect to the Registration Statement required to be filed
hereunder, the 20th calendar day following the Closing Date;
provided, however, that if any Holder fails to provide the Company with any
information that is required to be provided in the Registration Statement with
respect to such Holder (including the information required by Section 3(i)) or
if counsel to a Holder or to the placement agent does not furnish comments to
the Company with respect to information that is required to be provided in the
Registration Statement, then the Filing Date shall be extended until three (3)
Trading Days following the date of receipt of such information by the Company.

 

“Holder” or
“Holders” means the holder or holders, as the case may be, from time to
time of Registrable Securities.

 

“Indemnified
Party” shall have the meaning set forth in Section 5(c).

 

“Indemnifying
Party” shall have the meaning set forth in Section 5(c).

 

“Losses”
shall have the meaning set forth in Section 5(a).

 

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“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.

 

“Prospectus”
means the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a prospectus filed as part of an effective registration statement in reliance
upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

 

“Registrable
Securities” means the Shares, the Warrant Shares, the shares of Common
Stock issuable upon exercise of the warrant issued to Rodman & Renshaw,
Inc. in connection with the transactions contemplated by the Purchase Agreement
and the shares of Common Stock issuable upon exercise of the warrant issued to
Cardinal, together with any shares of Common Stock issued or issuable upon any
stock split, dividend or other distribution, recapitalization or similar event
with respect to the foregoing or in connection with any anti-dilution
provisions in the Warrant.

 

“Registration
Statement” means the registration statements required to be filed
hereunder, including (in each case) the Prospectus, amendments and supplements
to the registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in the registration statement.

 

“Rule 415”
means Rule 415 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such Rule.

 

“Rule 424”
means Rule 424 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such Rule.

 

“Securities Act”
means the Securities Act of 1933, as amended.

 

2.             Registration.

 

(a)           On or prior to the Filing Date, the Company shall
prepare and file with the Commission the Registration Statement covering the
resale of all of the Registrable Securities for an offering to be made on a
continuous basis pursuant to Rule 415. 
The Registration Statement required hereunder shall be on Form S-3
(except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case the Registration Statement
shall be on another appropriate form in accordance herewith), any may include
securities for the Company’s own account and/or the account

 

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of other holders of the Company’s securities.  The Registration Statement required
hereunder shall contain (except if otherwise directed by the Holders) the “Plan
of Distribution” attached hereto as Annex A.  The Company shall cause the Registration
Statement to become effective and remain effective as provided herein. The
Company shall use its commercially reasonable efforts to cause the Registration
Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof, but in any event not later than the
Effectiveness Date, and shall use its commercially reasonable efforts to keep
the Registration Statement continuously effective under the Securities Act
until the earlier of (a) twenty-four months after the Effectiveness Date of the
Registration Statement or (b) may be sold without volume restrictions pursuant
to Rule 144(k) under the Securities Act or any other rule of similar effect as
determined by the counsel to the Company pursuant to a written opinion letter
to such effect, addressed and acceptable to the Company’s transfer agent and
the affected Holders (the “Effectiveness Period”).

 

(b)           If: (i) a Registration Statement is not filed on or
prior to its Filing Date (if the Company files a Registration Statement without
affording Feldman Weinstein LLP as special counsel for the Holders for purposes
of such review only, the opportunity to review and comment on the same as
required by Section 3(a), the Company shall not be deemed to have satisfied
this clause (i)); or (ii) the Company fails to file with the Commission a
request for acceleration in accordance with Rule 461 promulgated under the
Securities Act, within five Trading Days of the date that the Company is
notified (orally or in writing, whichever is earlier) by the Commission that a
Registration Statement will not be “reviewed,” or not subject to further
review, or (iii) prior to the date when such Registration Statement is first
declared effective by the Commission, the Company fails to file a pre-effective
amendment and otherwise respond in writing to comments made by the Commission
in respect of such Registration Statement within ten Trading Days after the
receipt of comments by or notice from the Commission that such amendment is
required in order for a Registration Statement to be declared effective, or
(iv) a Registration Statement filed or required to be filed hereunder is not
declared effective by the Commission on or before the Effectiveness Date, or
(v) after a Registration Statement is first declared effective by the
Commission, it ceases for any reason to remain continuously effective as to all
Registrable Securities for which it is required to be effective, or the Holders
are not permitted to utilize the Prospectus therein to resell such Registrable
Securities, for in any such cases twenty Trading Days (which need not be
consecutive days) in the aggregate during any 12-month period (any such failure
or breach being referred to as an “Event,” and for purposes of clause
(i) or (iv) the date on which such Event occurs, or for purposes of clause (ii)
the date on which such five Trading Day period is exceeded, or for purposes of
clauses (iii) the date which such ten Trading Day period is exceeded, or for
purposes of clause (v) the date on which such twenty Trading Day period is
exceeded being referred to as “Event Date”), then in addition to any
other rights the Holders may have hereunder or under applicable law on each
monthly anniversary of each such Event Date (if the applicable Event shall not
have been cured by such date) until the applicable Event is cured, the Company
shall pay to each Holder an amount in cash, as liquidated damages and not as a
penalty, equal to 2% of the aggregate purchase price paid by such Holder
pursuant to the Purchase Agreement for any Registrable Securities then held by
such Holder.  If the Company fails to pay
any

 

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liquidated
damages pursuant to this Section in full within seven days after the date
payable, the Company will pay interest thereon at a rate of 18% per annum (or
such lesser maximum amount that is permitted to be paid by applicable law) to
the Holder, accruing daily from the date such liquidated damages are due until
such amounts, plus all such interest thereon, are paid in full.  The liquidated damages pursuant to the terms
hereof shall apply on a pro-rata basis for any portion of a month prior to the
cure of an Event.

 

(c)           If during the Effectiveness Period, the number of
Registrable Securities at any time exceeds 100% of the number of shares of
Common Stock then registered in a Registration Statement, then the Company
shall file as soon as reasonably practicable but in any case prior to the 30th
day following the date such number is exceeded, an additional Registration
Statement covering the resale of by the Holders of not less than all of such
Registrable Securities and the Company shall use commercially reasonable
efforts to cause such Registration Statement to be declared effective as soon
as reasonably practicable thereafter.

 

3.             Registration Procedures

 

In connection with
the Company’s registration obligations hereunder, the Company shall:

 

(a)           Not less than three Trading Days prior to the filing
of the Registration Statement or any related Prospectus or any amendment or
supplement thereto, the Company shall, (i) furnish to Feldman Weinstein LLP, as
special counsel for the Holders for the purposes of such review only, copies of
all such documents proposed to be filed (including documents incorporated or
deemed incorporated by reference to the extent requested by such Person) which
documents will be subject to the review of such Holders, and (ii) cause its
officers and directors, counsel and independent certified public accountants to
respond to such inquiries as shall be necessary, in the reasonable opinion of
respective counsel to conduct a reasonable investigation within the meaning of
the Securities Act.  The Company shall
not file the Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holders of a majority of the Registrable
Securities shall reasonably object in good faith. The failure of such special
counsel to respond within the specified time may be accepted by the Company as
a lack of any objections.

 

(b)           (i) Prepare and file with the Commission such
amendments, including post-effective amendments, to the Registration Statement
and the Prospectus used in connection therewith as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the
Commission such additional Registration Statements in order to register for
resale under the Securities Act all of the Registrable Securities; (ii) cause
the related Prospectus to be amended or supplemented by any required Prospectus
supplement, and as so supplemented or amended to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably possible to any comments received from
the Commission with respect to the Registration Statement or any amendment
thereto and, as

 

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promptly as reasonably possible, upon request, provide
the Holders true and complete copies of all correspondence from and to the
Commission relating to the Registration Statement; and (iv) comply in all
material respects with the provisions of the Securities Act and the Exchange
Act with respect to the disposition of all Registrable Securities covered by
the Registration Statement during the applicable period in accordance with the
intended methods of disposition by the Holders thereof set forth in the Registration
Statement as so amended or in such Prospectus as so supplemented.

 

(c)           Notify Feldman Weinstein, LLP, and in the case of
subclasses (iii) through (v) the Holders of Registrable Securities, as promptly
as reasonably possible (and, in the case of (i)(A) below, not less than two
Trading Days prior to such filing) and (if requested by any such Person)
confirm such notice in writing promptly following the day (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment to the
Registration Statement is proposed to be filed; (B) when the Commission
notifies the Company whether there will be a “review” of the Registration
Statement and whenever the Commission comments in writing on the Registration
Statement (the Company shall upon request provide true and complete copies
thereof and all written responses thereto to each of the Holders); and (C) with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective; (ii) of any request by the Commission or any other
Federal or state governmental authority during the period of effectiveness of
the Registration Statement for amendments or supplements to the Registration
Statement or Prospectus or for additional information; (iii) of the issuance by
the Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of the Registration Statement covering any
or all of the Registrable Securities or the initiation of any Proceedings for
that purpose; (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction, or the
initiation or threat in writing of any Proceeding for such purpose; and (v) of
the occurrence of any event or passage of time that makes the financial
statements included in the Registration Statement ineligible for inclusion
therein or any statement made in the Registration Statement or Prospectus or
any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain 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 light of the circumstances under which they were made, not misleading.  Each Holder hereby covenants to comply with
the covenants set forth in the Purchase Agreement.

 

(d)           Use its commercially reasonable efforts to avoid the
issuance of, or, if issued, obtain the withdrawal of (i) any order suspending
the effectiveness of the Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.

 

(e)           Furnish to each Holder, without charge, at least one
conformed copy of the Registration Statement and each amendment thereto,
including, to the extent requested by

 

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such Holder, financial statements and schedules, all
documents incorporated or deemed to be incorporated therein by reference and
all exhibits (including those previously furnished or incorporated by
reference) promptly after the filing of such documents with the Commission, in
each case only if such document is not available on-line on the Company’s or
EDGAR’s website.

 

(f)            Promptly deliver to each Holder, without charge, as
many copies of the Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such Holder may
reasonably request in connection with resales by the Holder of Registrable
Securities.  The Company hereby consents
to the use of such Prospectus and each amendment or supplement thereto by each
of the selling Holders in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement thereto,
except after the giving on any notice pursuant to Section 3(c).

 

(g)           Prior to any resale of Registrable Securities by a
Holder, use its commercially reasonable efforts to register or qualify or
cooperate with the selling Holders in connection with the registration or
qualification (or exemption from the registration or qualification) of such
Registrable Securities for the resale by the Holder under the securities or Blue
Sky laws of such jurisdictions within the United States as any Holder
reasonably requests in writing, to keep each the registration or qualification
(or exemption therefrom) effective during the Effectiveness Period and to do
any and all other acts or things reasonably necessary to enable the disposition
in such jurisdictions of the Registrable Securities covered by the Registration
Statement; provided, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified,
subject the Company to any material tax in any such jurisdiction where it is
not then so subject or file a general consent to service of process in any such
jurisdiction.

 

(h)           If requested by the Holders, cooperate with the Holders
to facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be delivered to a transferee pursuant to the
Registration Statement, which certificates shall be free, to the extent
permitted by the Purchase Agreement, of all restrictive legends, and to enable
such Registrable Securities to be in such denominations and registered in such
names as any such Holders may request.

 

(i)            Upon the occurrence of any event contemplated by
Section 3(c)(v), as promptly as reasonably possible, prepare a supplement or
amendment, including a post-effective amendment, to the Registration Statement
or a supplement to the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, neither the Registration Statement
nor such Prospectus will contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

 

(j)            Comply with all applicable rules and regulations of
the Commission.

 

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(k)           The Company may require each selling Holder to furnish
to the Company a certified statement as to the number of shares of Common Stock
beneficially owned by such Holder and, if required by the Commission, the
person thereof that has voting and dispositive control over the Shares and any
other information required to effect the registration of the Registrable
Securities.

 

4.             Registration Expenses.  All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to
the Registration Statement.  The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without
limitation, fees and expenses (A) with respect to filings required to be made
with the Trading Market on which the Common Stock is then listed for trading,
and (B) in compliance with applicable state securities or Blue Sky laws), (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing prospectuses if the
printing of prospectuses is reasonably requested by the holders of a majority
of the Registrable Securities included in the Registration Statement), (iii) messenger,
telephone and delivery expenses incurred by the Company, (iv) fees and
disbursements of counsel for the Company, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement.  In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit and the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder.  Notwithstanding the foregoing, all
underwriting discounts, brokerage fees and commission incurred by the Holders
shall be borne by the Holders.

 

5.             Indemnification

 

(a)           Indemnification by the Company. 
The Company shall, notwithstanding any termination of this Agreement,
indemnify and hold harmless each Holder, the officers, directors, agents and
employees of each of them, each Person who controls any such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
and the officers, directors, agents and employees of each such controlling
Person, to the fullest extent permitted by applicable law, from and against any
and all losses, claims, damages, liabilities, costs (including, without
limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”),
as incurred,  to the extent arising out
of or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that (1) such
untrue statements or omissions are based solely upon information regarding such
Holder furnished in writing to the Company by such Holder expressly for use
therein, or to the

 

7

 

extent that such information relates to such Holder or
such Holder’s proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in
the Registration Statement, such Prospectus or such form of Prospectus or in
any amendment or supplement thereto (it being understood that the Holder has
approved Annex A hereto for this purpose) or (2) in the case of an occurrence
of an event of the type specified in Section 3(c)(ii)-(v), the use by such
Holder of an outdated or defective Prospectus after the Company has notified
such Holder in writing that the Prospectus is outdated or defective and prior
to the receipt by such Holder of the Advice contemplated in Section 6(d).  The Company shall notify the Holders promptly
of the institution, threat or assertion of any Proceeding of which the Company
is aware in connection with the transactions contemplated by this Agreement.

 

(b)           Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and
the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses, as
incurred, to the extent arising out of or based upon: (x) such Holder’s failure
to comply with the prospectus delivery requirements of the Securities Act or
(y) any untrue or alleged untrue statement of a material fact contained in any
Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto or in any preliminary prospectus, or arising
out of or relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading (i) to the extent, but only to the extent, that such untrue
statement or omission is contained in any information so furnished in writing
by such Holder to the Company specifically for inclusion in the Registration
Statement or such Prospectus or (ii) to the extent that (1) such untrue
statements or omissions are based solely upon information regarding such Holder
furnished in writing to the Company by such Holder expressly for use therein,
or to the extent that such information relates to such Holder or such Holder’s
proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in the
Registration Statement (it being understood that the Holder has approved Annex
A hereto for this purpose), such Prospectus or such form of Prospectus or in
any amendment or supplement thereto or (2) in the case of an occurrence of an
event of the type specified in Section 3(c)(ii)-(v), the use by such Holder of
an outdated or defective Prospectus after the Company has notified such Holder
in writing that the Prospectus is outdated or defective and prior to the
receipt by such Holder of the Advice contemplated in Section 6(d).  In no event shall the liability of any
selling Holder hereunder be greater in amount than the dollar amount of the net
proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.

 

(c)           Conduct of Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the Person from whom
indemnity is sought (the “Indemnifying Party”) in writing, and the
Indemnifying Party shall have the right to assume the defense thereof,
including the employment of counsel reasonably

 

8

 

satisfactory to the Indemnified Party and the payment
of all fees and expenses incurred in connection with defense thereof; provided,
that the failure of any Indemnified Party to give such notice shall not relieve
the Indemnifying Party of its obligations or liabilities pursuant to this
Agreement, except (and only) to the extent that it shall be finally determined
by a court of competent jurisdiction (which determination is not subject to
appeal or further review) that such failure shall have prejudiced the
Indemnifying Party.

 

An Indemnified
Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party or Parties
unless:  (1) the Indemnifying Party has
agreed in writing to pay such fees and expenses; (2) the Indemnifying Party
shall have failed promptly to assume the defense of such Proceeding and to employ
counsel reasonably satisfactory to such Indemnified Party in any such
Proceeding; or (3) the named parties to any such Proceeding (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised by counsel that a
conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
the reasonable fees and expenses of one separate counsel shall be at the
expense of the Indemnifying Party).  The
Indemnifying Party shall not be liable for any settlement of any such
Proceeding effected without its written consent, which consent shall not be
unreasonably withheld.  No Indemnifying
Party shall, without the prior written consent of the Indemnified Party, effect
any settlement of any pending Proceeding in respect of which any Indemnified
Party is a party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability on claims that are the subject matter
of such Proceeding.

 

All reasonable
fees and expenses of the Indemnified Party (including reasonable fees and
expenses to the extent incurred in connection with investigating or preparing
to defend such Proceeding in a manner not inconsistent with this Section) shall
be paid to the Indemnified Party, as incurred, within ten Trading Days of
written notice thereof to the Indemnifying Party; provided, that the
Indemnified Party shall promptly reimburse the Indemnifying Party for that
portion of such fees and expenses applicable to such actions for which such
Indemnified Party is not entitled to indemnification hereunder, determined
based upon the relative faults of the parties.

 

(d)           Contribution.  If a claim
for indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
Party (by reason of public policy or otherwise), then each Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party in connection with the actions, statements or
omissions that resulted in such Losses as well as any other relevant equitable
considerations.  The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged

 

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untrue statement of a material fact or omission or
alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission.  The amount paid or payable by a party as a
result of any Losses shall be deemed to include, subject to the limitations set
forth in Section 5(c), any reasonable attorneys’ or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.

 

The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5(d) were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph.  Notwithstanding the
provisions of this Section 5(d), no Holder shall be required to contribute, in
the aggregate, any amount in excess of the amount by which the proceeds actually
received by such Holder from the sale of the Registrable Securities subject to
the Proceeding exceeds the amount of any damages that such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission, except in the case of fraud by such Holder.  The indemnity and contribution agreements
contained in this Section are in addition to any liability that the
Indemnifying Parties may have to the Indemnified Parties.

 

6.             Miscellaneous

 

(a)           Remedies.  In the event
of a breach by the Company or by a Holder, of any of their obligations under
this Agreement, each Holder or the Company, as the case may be, in addition to
being entitled to exercise all rights granted by law and under this Agreement,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement.  The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of
any action for specific performance in respect of such breach, it shall waive
the defense that a remedy at law would be adequate.

 

(b)           Intentionally Omitted.

 

(c)           Compliance.  Each Holder
covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.

 

(d)           Discontinued Disposition. 
Each Holder agrees by its acquisition of such Registrable Securities
that, upon receipt of a notice from the Company of the occurrence of any event
of the kind described in Section 3(c), such Holder will forthwith discontinue
disposition of such Registrable Securities under the Registration Statement
until such Holder’s receipt of the copies of the supplemented Prospectus and/or
amended Registration Statement or until it is advised in writing (the “Advice”)
by the Company

 

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that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement.  The Company may provide appropriate stop
orders to enforce the provisions of this paragraph.

 

(e)           Piggy-Back Registrations. 
If at any time during the Effectiveness Period there is not an effective
Registration Statement covering all of the Registrable Securities and the
Company shall determine to prepare and file with the Commission a registration
statement relating to an offering for its own account or the account of others
under the Securities Act of any of its equity securities, other than on Form
S-4 or Form S-8 (each as promulgated under the Securities Act) or their then
equivalents relating to equity securities to be issued solely in connection
with any acquisition of any entity or business or equity securities issuable in
connection with the stock option or other employee benefit plans, then the
Company shall send to each Holder a written notice of such determination and,
if within fifteen days after the date of such notice, any such Holder shall so
request in writing, the Company shall include in such registration statement
all or any part of such Registrable Securities such Holder requests to be
registered, subject to customary underwriter cutbacks applicable to all holders
of registration rights.

 

(f)            Amendments and Waivers.  The
provisions of this Agreement, including the provisions of this sentence, may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, unless the same shall be in
writing and signed by the Company and each Holder of the then outstanding
Registrable Securities.

 

(g)           Notices.  Any and all
notices or other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number in the
Purchase Agreement specified on the signature pages attached thereto prior to
6:30 p.m. (New York City time) on a Trading Day and electronic confirmation of
successful transmission is received, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number on the signature pages attached thereto on a day that is not a
Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day,
(c) the Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (d) upon actual receipt by the party
to whom such notice is required to be given. 
The address for such notices and communications shall be as set forth in
the Purchase Agreement

 

(h)           Successors and Assigns.  This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of each of the parties and shall inure to the benefit of each
Holder.  Each Holder may assign their
respective rights hereunder in the manner and to the Persons as permitted under
the Purchase Agreement.

 

(i)            Execution and Counterparts. 
This Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an

 

11

 

original and, all of which taken together shall
constitute one and the same Agreement. 
In the event that any signature is delivered by facsimile transmission,
such signature shall create a valid binding obligation of the party executing
(or on whose behalf such signature is executed) the same with the same force
and effect as if such facsimile signature were the original thereof.

 

(j)            Governing Law.  All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. 
Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the City of
New York, New York.  Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, New York for the adjudication
of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the
enforcement of this Agreement), and hereby irrevocably waives, and agrees not
to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is improper.  Each
party hereto hereby irrevocably waives personal service of process and consents
to process being served in any such suit, action or proceeding by delivering a
copy thereof via overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner
permitted by law. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence an action or
proceeding to enforce any provisions of this Agreement, then the prevailing
party in such action or proceeding shall be reimbursed by the other party for
its attorneys fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.

 

(k)           Cumulative Remedies.  The remedies
provided herein are cumulative and not exclusive of any remedies provided by
law.

 

(l)            Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their commercially reasonable efforts to find and
employ an alternative means to achieve the same or substantially the same
result as that contemplated by such term, provision, covenant or
restriction.  It is hereby stipulated
and declared to be the intention of the parties that they would have executed
the remaining terms, provisions, covenants and restrictions without including
any of such that may be hereafter declared invalid, illegal, void or
unenforceable.

 

12

 

(m)          Headings.  The headings
in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.

 

(n)           Independent Nature of Purchasers’ Obligations and
Rights.  The obligations of each Purchaser hereunder
is several and not joint with the obligations of any other Purchaser hereunder,
and no Purchaser shall be responsible in any way for the performance of the
obligations of any other Purchaser hereunder. 
Nothing contained herein or in any other agreement or document delivered
at any closing, and no action taken by any Purchaser pursuant hereto or
thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert with respect
to such obligations or the transactions contemplated by this Agreement.  Each Purchaser shall be entitled to protect
and enforce its rights, including without limitation the rights arising out of
this Agreement, and it shall not be necessary for any other Purchaser to be
joined as an additional party in any proceeding for such purpose.

 

(o)           Entire Agreement.  The
Transaction Documents, together with the exhibits and schedules thereto,
contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or
written, with respect to such matters, which the parties acknowledge have been
merged into such documents, exhibits and schedules.

 

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

 

13

 

 

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

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  IMMUNE RESPONSE CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ John M.
  Bonfiglio

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name: John M.
  Bonfiglio

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title: Chief
  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  [PURCHASERS’
  SIGNATURE PAGES TO FOLLOW]

  
									

 

14

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

Alpha Capital Aktiengesellschaft

 

	
  By:

  	
   /s/ Thomas
  Hackl

  	
   

  
	
   

  	
  Name: Thomas
  Hackl

  
	
   

  	
  Title: Director

  

 

15

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

BRISTOL INVESTMENT
FUND, LTD.

 

	
  By:

  	
   /s/ Paul
  Kessler

  	
   

  
	
   

  	
  Name: Paul
  Kessler

  
	
   

  	
  Title: Director

  

 

16

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

Name of Investor
Entity:

Cohanzick
Partners, L.P.

 

	
  By:

  	
   /s/ David
  K. Sherman

  	
   

  
	
   

  	
  Name: David K.
  Sherman

  
	
   

  	
  Title:
  Authorized Agent

  

 

17

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

Name of Investor
Entity:

Cranshire Capital
L.P.

 

	
  By:

  	
   /s/ Keith
  Goodman

  	
   

  
	
   

  	
  Name: Keith
  Goodman

  
	
   

  	
  Title: CFO
  -  Downsview Capital, Inc

  
	
   

  	
  THE GENERAL
  PARTNER

  

 

18

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

CRESCENT
INTERNATIONAL LTD.

 

	
  By:

  	
   /s/ Mel
  Craw Maxi Brezzi

  	
   

  
	
   

  	
  Name: Mel Craw
  Maxi Brezzi

  
	
   

  	
  Title:
  Authorized Signatories

  

 

19

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

Name of Investor
Entity: Colbart Birnet LP

 

	
  By:

  	
   /s/ Ezra
  Birnbaum

  	
   

  
	
   

  	
  Name: Ezra
  Birnbaum

  
	
   

  	
  Title: Member

  

 

20

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

Name of Investor
Entity: ELLIS INTERNATIONAL

 

	
  By:

  	
   /s/ John
  Cabot

  	
   

  
	
   

  	
  Name: John Cabot

  
	
   

  	
  Title: Officer

  

 

21

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

Name of Investor
Entity:  ENABLE GROWTH PARTNERS LP

 

	
  By:

  	
   /s/
  Mitchell Levine

  	
   

  
	
   

  	
  Name: Mitchell
  Levine

  
	
   

  	
  Title: Managing
  Partner

  

 

22

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

Name of Investor
Entity:

Gabriel Capital, L.P.

 

	
  By:

  	
   /s/ David
  K. Sherman

  	
   

  
	
   

  	
  Name: David K.
  Sherman

  
	
   

  	
  Title:
  Authorized Agent

  

 

23

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

Gamma Opportunity
Capital Partners, LP:

 

	
  By:

  	
   /s/
  Christopher Rossman

  	
   

  
	
   

  	
  Name:
  Christopher Rossman

  
	
   

  	
  Title: Managing
  Director

  

 

24

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

GRYPHON MASTER
FUND, LP

 

	
  By:

  	
   /s/
  Michael Scholten

  	
   

  
	
   

  	
  Name: Michael
  Scholten

  
	
   

  	
  Title:
  Authorized Agent

  

 

25

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

LANGLEY PARTNERS,
L.P.

 

	
  By:

  	
   /s/
  Jeffrey Thorp

  	
   

  
	
   

  	
  Name: Jeffrey
  Thorp

  
	
   

  	
  Title:

  	
  Managing Member
  of Langley Capital, LLC,

  
	
   

  	
   

  	
  its General
  Partner

  
				

 

26

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

Name of Investor
Entity:

Magellan
International Ltd.

 

	
  By:

  	
   /s/ Anna
  Marie Lowe

  	
   

  
	
   

  	
  Name: Anna Marie
  Lowe

  
	
   

  	
  Title: Director

  

 

27

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

Name of Investor
Entity:

OMICRON MASTER
TRUST

By: Omicron
Capital L.P., as advisor

By: Omicron
Capital Inc., its general partner

 

	
  By:

  	
   /s/
  Olivier Morali

  	
   

  
	
   

  	
  Name: Olivier
  Morali

  
	
   

  	
  Title: President

  

 

28

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

Name of Investor
Entity: PLATINUM PARTNERS VALUE ARBITRAGE FUND LP

 

	
  By:

  	
   /s/ Mark
  Nordlicht

  	
   

  
	
   

  	
  Name: Mark
  Nordlicht

  
	
   

  	
  Title: Managing
  Member of G.P.

  

 

29

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

PORTSIDE GROWTH
AND OPPORTUNITY FUND:

 

	
  By:

  	
   /s/
  Jeffrey Solomon

  	
   

  
	
   

  	
  Name: Jeffrey
  Solomon

  
	
   

  	
  Title:
  Authorized Signatory

  

 

30

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

Name of Investor
Entity:

SF CAPITAL
PARTNERS LTD

 

	
  By:

  	
   /s/ Brian
  H. Davidson

  	
   

  
	
   

  	
  Name: Brian H.
  Davidson

  
	
   

  	
  Title:

  

 

31

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

	
  By:

  	
   /s/ Murray
  Todd

  	
   

  
	
  Silver Oak
  Investments, Inc.

  
	
  Name: Murray
  Todd

  
	
  Title: Board

  

 

32

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

SMITHFIELD
FIDUCIARY LLC

 

	
  By:

  	
   /s/ Adam
  J. Chill

  	
   

  
	
   

  	
  Name: Adam J.
  Chill

  
	
   

  	
  Title:
  Authorized Signatory

  

 

33

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

Name of Investor
Entity: SOLOMON STRATEGIC HOLDINGS, INC.

 

	
  By:

  	
   /s/ A P
  MacKellar

  	
   

  
	
   

  	
  Name: A P
  MacKellar

  
	
   

  	
  Title: Director

  

 

34

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

Name of Investor
Entity: SPECTRA CAPITAL MANAGEMENT

 

	
  By:

  	
   /s/ Greg
  Porges

  	
   

  
	
   

  	
  Name: Greg
  Porges

  
	
   

  	
  Title: Sole
  Member

  

 

35

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

Name of Investor
Entity:

 

	
  By:

  	
   /s/ M.
  Finklestein

  	
  (Stonestreet)

  
	
   

  	
  Name: M.
  Finklestein

  
	
   

  	
  Title: President

  

 

36

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

THE TAIL WIND FUND
LIMITED

By: Tail Wind
Advisory & Management Ltd.

 

	
  By:

  	
   /s/ David
  Crook

  	
   

  
	
   

  	
  David Crook,
  Chief Executive Officer

  

 

37

 

[PURCHASER’S IMNR RRA SIGNATURE PAGE]

 

Name of Investor
Entity: TCMP3 PARTNERS LLP

 

	
  By:

  	
   /s/ Steven
  E. Slawson

  	
   

  
	
   

  	
  Name: Steven E.
  Slawson

  
	
   

  	
  Title: Principal

  

 

38

 

ANNEX A

 

Plan of
Distribution

 

The Selling
Stockholders and any of their pledgees, assignees and successors-in-interest
may, from time to time, sell any or all of their shares of Common Stock on any
stock exchange, market or trading facility on which the shares are traded or in
private transactions.  These sales may
be at fixed or negotiated prices.  The
Selling Stockholders may use any one or more of the following methods when
selling shares:

 

•      ordinary
brokerage transactions and transactions in which the broker-dealer solicits
purchasers;

 

•      block
trades in which the broker-dealer will attempt to sell the shares as agent but
may position and resell a portion of the block as principal to facilitate the
transaction;

 

•      purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;

 

•      an
exchange distribution in accordance with the rules of the applicable exchange;

 

•      privately
negotiated transactions;

 

•      settlement
of short sales entered into after the date of this prospectus;

 

•      broker-dealers
may agree with the Selling Stockholders to sell a specified number of such
shares at a stipulated price per share;

 

•      a
combination of any such methods of sale; and

 

•      any
other method permitted pursuant to applicable law.

 

The Selling
Stockholders may also sell shares under Rule 144 under the Securities Act, if
available, rather than under this prospectus.

 

Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales.  Broker-dealers
may receive commissions or discounts from the Selling Stockholders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated.  The Selling
Stockholders do not expect these commissions and discounts to exceed what is
customary in the types of transactions involved.

 

The Selling
Stockholders may from time to time pledge or grant a security interest in some
or all of the shares of common stock owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may
offer and sell the shares of common stock from time to time under this
prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933

 

39

 

amending the list of Selling Stockholders to include the pledgee,
transferee or other successors in interest as Selling Stockholders under this
prospectus.

 

The Selling
Stockholders and any broker-dealers or agents that are involved in selling the
shares may be deemed to be “underwriters” within the meaning of the Securities
Act in connection with such sales.  In
such event, any commissions received by such broker-dealers or agents and any
profit on the resale of the shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.  The Selling Stockholders have informed the
Company that it does not have any agreement or understanding, directly or
indirectly, with any person to distribute the Common Stock.

 

The Company is
required to pay all fees and expenses incident to the registration of the
shares.  The Company has agreed to
indemnify the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.

 

40Exhibit 10.147

 

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THIS SECURITY AND THE
SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES

 

Warrant
No. 101003-25

 

 

COMMON STOCK PURCHASE WARRANT

 

 

To Purchase 197,000 Shares
of Common Stock of

 

The Immune Response Corporation

 

THIS
COMMON STOCK PURCHASE WARRANT CERTIFIES that, for value received, Rodman and
Renshaw, Inc. (the “Holder”), is entitled, upon the terms and subject to
the limitations on exercise and the conditions hereinafter set forth, at any
time on or after October 10, 2003 (the “Initial Exercise Date”) and on
or prior to the close of business on October 10, 2008 (the “Termination Date”)
but not thereafter, to subscribe for and purchase from The Immune Response
Corporation, a corporation incorporated in the State of Delaware (the “Company”),
up to 197,000 shares (the “Warrant Shares”) of Common Stock, of the
Company (the “Common Stock”). 
The purchase price of one share of Common Stock (the “Exercise Price”)
under this Warrant shall be $3.32,
subject to adjustment hereunder. 
The Exercise Price and the number of Warrant Shares for which the
Warrant is exercisable shall be subject to adjustment as provided herein. Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that certain Securities
Purchase Agreement (the “Purchase Agreement”), dated October 10, 2003,
between the Company and the purchasers signatory thereto.

 

1

 

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

 

2.     Authorization of Shares.  The Company covenants that all Warrant
Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this
Warrant in accordance with the terms and conditions hereof, be duly authorized,
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).

 

3.     Exercise of Warrant.

 

(a)  Except as provided in
Section 3(c) herein, exercise of the purchase rights represented by this
Warrant may be made at any time or times on or after the Initial Exercise Date
and on or before the Termination Date by the surrender of this Warrant and the
Notice of Exercise Form annexed hereto duly executed, at the office of the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the registered Holder at the address of such Holder
appearing on the books of the Company) and upon payment of the Exercise Price
of the shares thereby purchased by wire transfer or cashier’s check of
immediately available funds drawn on a United States bank or by means of a
cashless exercise pursuant to Section 3(d), the Holder shall be entitled to
receive a certificate for the number of Warrant Shares so purchased.  Certificates for shares purchased hereunder
shall be delivered to the Holder within five (5) Trading Days after the date on
which this Warrant shall have been exercised as aforesaid. This Warrant shall
be deemed to have been exercised and such certificate or certificates shall be
deemed to have been issued, and the Holder or any other person so designated to
be named therein shall be deemed to have become a holder of record of such
shares for all purposes, as of the date the Warrant has been exercised by
payment to the Company of the Exercise Price and all taxes required to be paid
by the Holder, if any, pursuant to Section 5 prior to the issuance of such
shares, have been paid.  If the Company
fails to deliver to the Holder a certificate or certificates representing the
Warrant Shares pursuant to this Section 3(a) by the close of business on the
fifth Trading Day after the date of exercise, then the Holder will have the
right to rescind such exercise.  In
addition to any other rights available to the Holder, if the Company fails to
deliver to the Holder a certificate or certificates representing the Warrant
Shares pursuant to an exercise by the close of business on the fifth Trading Day
after the date of exercise, and if after such fifth Trading Day the Holder is
required by its broker to purchase (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of
the Warrant Shares which the Holder anticipated receiving upon such exercise (a
“Buy-In”), then the Company shall (1) pay in cash to the Holder the
amount by which (x) the Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased exceeds (y)
the amount obtained by multiplying (A) the number of Warrant Shares that the
Company was required to deliver to the Holder in connection with the exercise
at issue times (B) the price at which the sell order giving rise to such purchase
obligation was executed, and (2) at the option of the Holder, either reinstate
the portion of the Warrant and equivalent number of Warrant Shares for which
such exercise was not honored or deliver to the Holder the number of shares of
Common Stock that would have been issued had the

 

2

 

Company timely complied with its exercise and delivery obligations
hereunder.  For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted exercise of shares of Common Stock with an
aggregate sale price giving rise to such purchase obligation of $10,000, under
clause (1) of the immediately preceding sentence the Company shall be required
to pay the Holder $1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the Buy-In, together
with applicable confirmations and other evidence reasonably requested by the
Company.  Nothing herein shall limit a
Holder’s right to pursue any other remedies available to it hereunder, at law
or in equity including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company’s failure to timely
deliver certificates representing shares of Common Stock upon exercise of the
Warrant as required pursuant to the terms hereof.

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

As
used herein, “VWAP” means, for any date, the price determined by the first of
the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the Trading
Market on which the Common Stock is then listed or quoted as reported by Bloomberg
Financial L.P. (based on a Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m.
Eastern Time); (b) if the Common Stock is not then listed or quoted on a
Trading Market and if prices for the Common Stock are then quoted on the OTC
Bulletin Board, the volume weighted average price of the Common Stock for such
date (or the nearest preceding date) on the OTC Bulletin Board; (c)  if
the Common Stock is not then listed or quoted on the OTC Bulletin Board and if
prices for the Common Stock are then reported in the “Pink Sheets” published by
the National Quotation Bureau Incorporated (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported; or (d) in all other cases, the fair
market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the holders of a majority of the Shares
then outstanding and reasonably acceptable to the Company.

 

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

 

5.     Charges,
Taxes and Expenses.  Issuance of
certificates for Warrant Shares shall be made without charge to the Holder for
any issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall be paid by
the Company, and such certificates shall be issued in the name of the Holder or
in such name or names
as may be directed by the Holder; provided, however, that in the
event certificates for Warrant Shares are to be issued in a name other than the
name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder;
and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.

 

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

 

7.     Transfer, Division and
Combination.

 

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

 

4

 

Purchase
Agreement, this Warrant and all rights hereunder are transferable, in whole or
in part, upon surrender of this Warrant, so long as the amount of Warrant
Shares transferred is equal to at least 25,000 shares (on an as exercised
basis) at the principal office of the Company, together with a written
assignment of this Warrant substantially in the form attached hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such
payment, the Company shall execute and deliver a new Warrant or Warrants in the
name of the assignee or assignees and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled.  A
Warrant, if properly assigned, may be exercised by a new holder for the
purchase of Warrant Shares without having a new Warrant issued.

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

11.   Adjustments of Exercise
Price and Number of Warrant Shares. 
The number and kind of securities purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment from time to time
upon the happening of any of the following. 
In case the Company shall (i) pay a dividend in shares of Common Stock
or make a distribution in shares of Common Stock to holders of its outstanding
Common Stock, (ii) subdivide its outstanding shares of Common Stock into a
greater number of shares, (iii) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock, or (iv) issue any shares of
its capital stock in a reclassification of the Common Stock, then the number of
Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto
shall be adjusted so that the Holder shall be entitled to receive the kind and
number of Warrant Shares or other securities of the Company which it would have
owned or have been entitled to receive had such Warrant been exercised in
advance thereof.  Upon each such
adjustment of the kind and number of Warrant Shares or other securities of the
Company which are purchasable hereunder, the Holder shall thereafter be
entitled to purchase the number of Warrant Shares or other securities resulting
from such adjustment at an Exercise Price per Warrant Share or other security
obtained by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Shares purchasable pursuant hereto
immediately prior to such adjustment and dividing by the number of Warrant
Shares or other securities of the Company resulting from such adjustment.  An adjustment made pursuant to this
paragraph shall become effective immediately after the effective date of such
event retroactive to the record date, if any, for such event.

 

 

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

 

6

 

reclassification, merger,
consolidation or disposition of assets, the successor or acquiring corporation
(if other than the Company) shall expressly assume the due and punctual
observance and performance of each and every covenant and condition of this
Warrant to be performed and observed by the Company and all the obligations and
liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments of Warrant Shares
for which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 12.  For purposes of this Section 12, “common
stock of the successor or acquiring corporation” shall include stock of such
corporation of any class which is not preferred as to dividends or assets over
any other class of stock of such corporation and which is not subject to
redemption and shall also include any evidences of indebtedness, shares of
stock or other securities which are convertible into or exchangeable for any
such stock, either immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights to subscribe
for or purchase any such stock.  The
foregoing provisions of this Section 12 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.

 

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

 

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

 

15.   Notice of Corporate
Action.  If at any time:

 

(a)           the
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend or other distribution, or any right to
subscribe for or purchase any evidences of its indebtedness, any shares of
stock of any class or any other securities or property, or to receive any other
right, or

 

(b)           there
shall be any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any consolidation or
merger of the Company with, or any sale, transfer or other disposition of all
or substantially all the property, assets or business of the Company to,
another corporation or,

 

(c)           there
shall be a voluntary or involuntary dissolution, liquidation or winding up of
the Company;

 

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

 

7

 

when
the same shall or is expected to take place. 
Such notice in accordance with the foregoing clause also shall specify
(A) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common Stock
shall be entitled to any such dividend, distribution or right, and the amount
and character thereof, and (B) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is expected to take place and the time,
if any such time is to be fixed, as of which the holders of Common Stock shall
be entitled to exchange their Warrant Shares for securities or other property
deliverable upon such disposition, dissolution, liquidation or winding up.  Each such written notice shall be sufficiently
given if addressed to Holder at the last address of Holder appearing on the
books of the Company and delivered in accordance with Section 18(d).  Failure to provide such notice shall not
affect the validity of any action taken in connection with such dividend,
distribution, subscription or purchase rights, or proposed reorganization,
reclassification, recapitalization, merger, consolidation, sale, transfer,
disposition, conveyance, dissolution, liquidation or winding up.

 

16.   Authorized Shares.  The Company covenants that during the period
the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of the
Warrant Shares upon the exercise of any purchase rights under this Warrant.  The Company further covenants that its
issuance of this Warrant shall constitute full authority to its officers who
are charged with the duty of executing stock certificates to execute and issue
the necessary certificates for the Warrant Shares upon the exercise of the
purchase rights under this Warrant.  The
Company will take all such reasonable action as may be necessary to assure that
such Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Trading Market upon
which the Common Stock may be listed.

 

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

 

Before
taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.

 

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

 

8

 

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

 

18.   Miscellaneous.

 

(a)   Jurisdiction.  This
Warrant shall constitute a contract under the laws of New York, without regard
to its conflict of law, principles or rules.

 

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

 

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

 

(d)   Notices.  Any
notice, request or other document required or permitted to be given or
delivered to the Holder by the Company shall be delivered in accordance with
the notice provisions of the Purchase Agreement; provided upon any permitted
assignment of this Warrant, the assignee shall promptly provide the Company
with its contact information.

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

 

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

 

IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized.

 

10

 

Dated:  October 10, 2003

 

	
   

  	
  THE IMMUNE RESPONSE
  CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ John N. Bonfiglio

  
	
   

  	
   

  	
  Name:

  	
  John N. Bonfiglio

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
					

 

11

 

NOTICE OF EXERCISE

 

To:          The
Immune Response Corporation

 

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

 

(2)   Payment
shall take the form of (check applicable box):

 

o
in lawful money of the United States; or

 

o
the cancellation of such number of Warrant Shares as is necessary, in
accordance with the formula set forth in subsection 3(d), to exercise this
Warrant with respect to the maximum number of Warrant Shares purchasable
pursuant to the cashless exercise procedure set forth in subsection 3(d).

 

(3)   Please
issue a certificate or certificates representing said Warrant Shares in the
name of the undersigned or in such other name as is specified below:

 

 

The Warrant Shares shall be delivered to the following:

 

 

 

 

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

 

	
   

  	
  Rodman and Renshaw, Inc.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  	
   

  	
   

  
							

 

12

 

ASSIGNMENT FORM

 

(To assign the
foregoing warrant, execute

this form and supply required information. 

Do not use this form to exercise the warrant.)

 

 

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

 

 

                                                                                                   
whose address is

 

 

 

 

	
   

  	
   

  	
   

  	
   

  	
  Dated:                          ,              

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Holder’s Signature:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Holder’s Address:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
									

 

 

 

Signature Guaranteed: 
___________________________________________

 

 

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

 

13

 

NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THIS SECURITY AND THE
SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES

 

Warrant
No. 101003-27

 

 

COMMON STOCK PURCHASE WARRANT

 

 

To Purchase 297,059 Shares
of Common Stock of

 

The Immune Response Corporation

 

THIS
COMMON STOCK PURCHASE WARRANT CERTIFIES that, for value received, Rodman and
Renshaw, Inc. (the “Holder”), is entitled, upon the terms and subject to
the limitations on exercise and the conditions hereinafter set forth, at any
time on or after October 10, 2003 (the “Initial Exercise Date”) and on
or prior to the close of business on October 10, 2008 (the “Termination Date”)
but not thereafter, to subscribe for and purchase from The Immune Response
Corporation, a corporation incorporated in the State of Delaware (the “Company”),
up to 297,059 shares (the “Warrant Shares”) of Common Stock, of the
Company (the “Common Stock”). 
The purchase price of one share of Common Stock (the “Exercise Price”)
under this Warrant shall be $3.32,
subject to adjustment hereunder. 
The Exercise Price and the number of Warrant Shares for which the
Warrant is exercisable shall be subject to adjustment as provided herein. Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that certain Securities
Purchase Agreement (the “Purchase Agreement”), dated October 10, 2003,
between the Company and the purchasers signatory thereto.

 

1

 

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

 

2.     Authorization of Shares.  The Company covenants that all Warrant
Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this
Warrant in accordance with the terms and conditions hereof, be duly authorized,
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).

 

3.     Exercise of Warrant.  

 

(a)  Except as provided in
Section 3(c) herein, exercise of the purchase rights represented by this
Warrant may be made at any time or times on or after the Initial Exercise Date
and on or before the Termination Date by the surrender of this Warrant and the
Notice of Exercise Form annexed hereto duly executed, at the office of the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the registered Holder at the address of such Holder
appearing on the books of the Company) and upon payment of the Exercise Price
of the shares thereby purchased by wire transfer or cashier’s check of immediately
available funds drawn on a United States bank or by means of a cashless
exercise pursuant to Section 3(d), the Holder shall be entitled to receive a
certificate for the number of Warrant Shares so purchased.  Certificates for shares purchased hereunder
shall be delivered to the Holder within five (5) Trading Days after the date on
which this Warrant shall have been exercised as aforesaid. This Warrant shall
be deemed to have been exercised and such certificate or certificates shall be
deemed to have been issued, and the Holder or any other person so designated to
be named therein shall be deemed to have become a holder of record of such
shares for all purposes, as of the date the Warrant has been exercised by
payment to the Company of the Exercise Price and all taxes required to be paid
by the Holder, if any, pursuant to Section 5 prior to the issuance of such
shares, have been paid.  If the Company
fails to deliver to the Holder a certificate or certificates representing the
Warrant Shares pursuant to this Section 3(a) by the close of business on the
fifth Trading Day after the date of exercise, then the Holder will have the
right to rescind such exercise.  In
addition to any other rights available to the Holder, if the Company fails to
deliver to the Holder a certificate or certificates representing the Warrant
Shares pursuant to an exercise by the close of business on the fifth Trading
Day after the date of exercise, and if after such fifth Trading Day the Holder
is required by its broker to purchase (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares which the Holder anticipated receiving upon such
exercise (a "Buy-In"), then the Company shall (1) pay in cash
to the Holder the amount by which (x) the Holder's total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (A) the number of
Warrant Shares that the Company was required to deliver to the Holder in
connection with the exercise at issue times (B) the price at which the sell
order giving rise to such purchase obligation was executed, and (2) at the
option of the Holder, either reinstate the portion of the Warrant and
equivalent number of Warrant Shares for which such exercise was not honored or
deliver to the Holder the number of shares of Common Stock that would have been
issued had the 

 

2

 

Company timely complied with its exercise and delivery obligations
hereunder.  For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted exercise of shares of Common Stock with an
aggregate sale price giving rise to such purchase obligation of $10,000, under
clause (1) of the immediately preceding sentence the Company shall be required
to pay the Holder $1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the Buy-In, together
with applicable confirmations and other evidence reasonably requested by the
Company.  Nothing herein shall limit a
Holder's right to pursue any other remedies available to it hereunder, at law
or in equity including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company's failure to timely
deliver certificates representing shares of Common Stock upon exercise of the
Warrant as required pursuant to the terms hereof.

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

As
used herein, “VWAP” means, for any date, the price determined by the first of
the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the daily volume weighted average price of the Common
Stock for such date (or the nearest preceding date) on the Trading Market on
which the Common Stock is then listed or quoted as reported by Bloomberg
Financial L.P. (based on a Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m.
Eastern Time); (b) if the Common Stock is not then listed or quoted on a
Trading Market and if prices for the Common Stock are then quoted on the OTC
Bulletin Board, the volume weighted average price of the Common Stock for such
date (or the nearest preceding date) on the OTC Bulletin Board; (c)  if
the Common Stock is not then listed or quoted on the OTC Bulletin Board and if
prices for the Common Stock are then reported in the “Pink Sheets” published by
the National Quotation Bureau Incorporated (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported; or (d) in all other cases, the fair
market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the holders of a majority of the Shares
then outstanding and reasonably acceptable to the Company.

 

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

 

5.     Charges, Taxes and
Expenses.  Issuance of certificates
for Warrant Shares shall be made without charge to the Holder for any issue or
transfer tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by the Company, and
such certificates shall be issued in the name of the Holder or in such name or
names as may be directed by the Holder; provided, however, that
in the event certificates for Warrant Shares are to be issued in a name other
than the name of the Holder, this Warrant when surrendered for exercise shall
be accompanied by the Assignment Form attached hereto duly executed by the
Holder; and the Company may require, as a condition thereto, the payment of a
sum sufficient to reimburse it for any transfer tax incidental thereto.

 

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

 

7.     Transfer, Division and
Combination.  

 

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

 

4

 

Purchase Agreement, this Warrant and all rights hereunder are
transferable, in whole or in part, upon surrender of this Warrant, so long as
the amount of Warrant Shares transferred is equal to at least 25,000 shares (on
an as exercised basis) at the principal office of the Company, together with a
written assignment of this Warrant substantially in the form attached hereto
duly executed by the Holder or its agent or attorney and funds sufficient to
pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such
payment, the Company shall execute and deliver a new Warrant or Warrants in the
name of the assignee or assignees and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a new
Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled.  A
Warrant, if properly assigned, may be exercised by a new holder for the
purchase of Warrant Shares without having a new Warrant issued.  

 

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

 

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

 

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

 

(e)   If, at the time of the surrender of this Warrant in connection
with any transfer of this Warrant, the transfer of this Warrant shall not be
registered pursuant to an effective registration statement under the Securities
Act and under applicable state securities or blue sky laws, the Company may
require, as a condition of allowing such transfer (i) that the Holder or
transferee of this Warrant, as the case may be, furnish to the Company a
written opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect
that such transfer may be made without registration under the Securities Act
and under applicable state securities or blue sky laws, (ii) that the holder or
transferee execute and deliver to the Company an investment letter in form and
substance acceptable to the Company and (iii) that the transferee be an
"accredited investor" as defined in Rule 501(a) promulgated under the
Securities Act.

 

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

 

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

 

5

 

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

 

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

 

11.   Adjustments of Exercise
Price and Number of Warrant Shares. 
The number and kind of securities purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment from time to time
upon the happening of any of the following. 
In case the Company shall (i) pay a dividend in shares of Common Stock
or make a distribution in shares of Common Stock to holders of its outstanding
Common Stock, (ii) subdivide its outstanding shares of Common Stock into a
greater number of shares, (iii) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock, or (iv) issue any shares of
its capital stock in a reclassification of the Common Stock, then the number of
Warrant Shares purchasable upon exercise of this Warrant immediately prior
thereto shall be adjusted so that the Holder shall be entitled to receive the
kind and number of Warrant Shares or other securities of the Company which it
would have owned or have been entitled to receive had such Warrant been
exercised in advance thereof.  Upon each
such adjustment of the kind and number of Warrant Shares or other securities of
the Company which are purchasable hereunder, the Holder shall thereafter be
entitled to purchase the number of Warrant Shares or other securities resulting
from such adjustment at an Exercise Price per Warrant Share or other security
obtained by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Shares purchasable pursuant hereto
immediately prior to such adjustment and dividing by the number of Warrant
Shares or other securities of the Company resulting from such adjustment.  An adjustment made pursuant to this
paragraph shall become effective immediately after the effective date of such
event retroactive to the record date, if any, for such event.

 

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

 

6

 

reclassification, merger,
consolidation or disposition of assets, the successor or acquiring corporation
(if other than the Company) shall expressly assume the due and punctual
observance and performance of each and every covenant and condition of this
Warrant to be performed and observed by the Company and all the obligations and
liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments of Warrant Shares
for which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 12.  For purposes of this Section 12, “common
stock of the successor or acquiring corporation” shall include stock of such
corporation of any class which is not preferred as to dividends or assets over
any other class of stock of such corporation and which is not subject to
redemption and shall also include any evidences of indebtedness, shares of
stock or other securities which are convertible into or exchangeable for any
such stock, either immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights to subscribe
for or purchase any such stock.  The
foregoing provisions of this Section 12 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets. 

 

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

 

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

 

15.   Notice of Corporate
Action.  If at any time:

 

(a)           the
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend or other distribution, or any right to
subscribe for or purchase any evidences of its indebtedness, any shares of
stock of any class or any other securities or property, or to receive any other
right, or

 

(b)           there
shall be any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any consolidation or
merger of the Company with, or any sale, transfer or other disposition of all
or substantially all the property, assets or business of the Company to,
another corporation or,

 

(c)           there
shall be a voluntary or involuntary dissolution, liquidation or winding up of
the Company;

 

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

 

7

 

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

 

16.   Authorized Shares.  The Company covenants that during the period
the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of the
Warrant Shares upon the exercise of any purchase rights under this
Warrant.  The Company further covenants
that its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant.  The Company will take all such reasonable action as may be
necessary to assure that such Warrant Shares may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements
of the Trading Market upon which the Common Stock may be listed. 

 

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

 

Before
taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.

 

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

 

8

 

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

 

18.   Miscellaneous.

 

(a)   Jurisdiction.  This
Warrant shall constitute a contract under the laws of New York, without regard
to its conflict of law, principles or rules.

 

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

 

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

 

(d)   Notices.  Any
notice, request or other document required or permitted to be given or
delivered to the Holder by the Company shall be delivered in accordance with
the notice provisions of the Purchase Agreement; provided upon any permitted
assignment of this Warrant, the assignee shall promptly provide the Company
with its contact information.

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized.

 

10

 

Dated:  October 10, 2003

 

	
   

  	
  THE IMMUNE RESPONSE
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ John N. Bonfiglio

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John N. Bonfiglio

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
					

 

11

 

NOTICE
OF EXERCISE

 

To:          The
Immune Response Corporation

 

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

 

(2)  Payment shall take the form of (check applicable box):

o
in lawful money of the United States; or

o
the cancellation of such number of Warrant Shares as is necessary, in
accordance with the formula set forth in subsection 3(d), to exercise this
Warrant with respect to the maximum number of Warrant Shares purchasable
pursuant to the cashless exercise procedure set forth in subsection 3(d).

  

(3)  Please issue a certificate or certificates representing
said Warrant Shares in the name of the undersigned or in such other name as is
specified below:

 

 

The Warrant Shares shall be delivered to the following:

 

 

 

 

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

 

	
   

  	
  Rodman and Renshaw, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  	
   

  
						

 

12

 

ASSIGNMENT
FORM

 

(To assign the foregoing warrant, execute

this form and supply required information. 

Do not use this form to exercise the warrant.)

 

 

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

 

 

                                                                                                  whose
address is

 

 

 

 

	
   

  	
   

  	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Holder’s Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Holder’s Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature Guaranteed:

  	
   

  	
   

  	
   

  
									

 

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

 

13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00058-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00058-of-00352.parquet"}]]