Document:

THE IMMUNE
RESPONSE CORPORATION

8% CONVERTIBLE SECURED PROMISSORY NOTE

$819,000                                                                                                                 New
York, New York

June 6, 2003

In consideration of the
receipt of $819,000, The Immune Response Corporation, a Delaware corporation
(the “Issuer”), hereby unconditionally promises to pay to the order of Cheshire
Associates LLC (the “Purchaser”), at the office of the Purchaser located at 535
Madison Avenue, 18th Floor, New York, New York 10022, or such other
address designated by the Purchaser, in lawful money of the United States of
America and in immediately available funds, on October 6, 2003 (the “Note
Maturity Date”) the principal amount of $819,000 and all accrued interest at
the rate of eight (8%) percent per annum based on a 365-day year (“Interest
Rate”).

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

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

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

This Note (including all
accrued and unpaid interest) shall become convertible on the terms to be
reasonably negotiated in good faith by the Purchaser and the Issuer.

Upon the occurrence of
any one or more of the Events of Default specified on Exhibit A attached
hereto, all amounts then remaining unpaid on this Note may be declared by the
Purchaser to be immediately due and payable.

 

 

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

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

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

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

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

	
   

  	
  THE IMMUNE RESPONSE CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

2

 

Exhibit
A

Events
of Default.

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

(i)            Issuer shall fail to pay any
principal or interest on the Note within three (3) business days after such
payment becomes due in accordance with the terms thereof or hereof;

(ii)           Issuer shall default, in any material
respect, in the observance or performance of any other agreement contained in
the Security Agreement and such default shall continue unremedied for a period
of ten (10) days after written notice to Issuer of such default; or

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

then,
and in any such event, (x) if such event is an Event of Default specified in
clause (iii) above of with respect to Issuer, the Note (with all accrued and
unpaid interest thereon) and all other amounts owing under any of the
promissory notes issued by the Issuer to the Purchaser or any related party of
the Purchaser shall automatically and immediately become due and payable and
(y) if such event is any other Event of Default, Purchaser may, by written notice
to Issuer, immediately declare the Note (with all accrued and unpaid interest
thereon) to be due and payable forthwith, whereupon the same shall immediately
become due and payable.  Except as
expressly provided above, presentation, demand, protest and all other notices
of any kind are hereby expressly waived by Issuer.Exhibit 10.142

 

PURCHASE AGREEMENT

 

PURCHASE
AGREEMENT (this “Agreement”) is made as of the 23rd day of June 2003, by
and between The Immune Response Corporation, a corporation organized under the
laws of the State of Delaware (the “Company”), with its principal
offices at 5931 Darwin Court, Carlsbad, California 92008, and individuals and
entities listed on Exhibit A (the “Purchasers”) who become
parties to this Agreement by executing and delivering a financing signature
page in the form attached hereto as Exhibit B (the “Financing
Signature Page”).

 

W I T N E S S E T H :

 

WHEREAS, the
Company and each Purchaser are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by the
provisions of Regulation D (“Regulation D”), as promulgated by the
United States Securities and Exchange Commission (the “SEC”) under the
Securities Act of 1933, as amended (the “Securities Act”) and Section
4(2) of the Securities Act; and

 

WHEREAS,  the Company desires to issue and sell to the
Purchasers and the Purchasers desire to purchase, severally and not jointly,
12% promissory notes in the aggregate principal amount of One Million Dollars
($1,000,000), substantially in the form attached to this Agreement as Exhibit
C (“Note(s)”) and 166,665 shares of the Company’s common stock (“Common
Stock”), par value $0.0025 per share (“Shares”).  The amount of Notes and Shares purchased by
each Purchaser is set forth on Exhibit A;

 

WHEREAS, contemporaneous with the execution and delivery
of this Agreement, the Company and the Purchasers are executing and delivering
a Registration Rights Agreement, in the form attached hereto as Exhibit D
(the “Registration Rights Agreement”), pursuant to which the Company has
agreed to provide certain “piggyback” registration rights for the Shares and
Contingent Shares (as hereinafter defined) under the Securities Act and the
rules and regulations promulgated thereunder, and applicable state securities
laws; and

 

WHEREAS,
contemporaneous with the execution and delivery of this Agreement, the Company
shall execute an Escrow Agreement, in the form attached hereto as Exhibit E
(the “Escrow Agreement”), pursuant to which the Company shall deposit
166,665 shares of its Common Stock representing the number of Pre-Payment
Penalty Shares (as hereinafter defined) which may be issued to Purchasers in
accordance with the terms of this Agreement.

 

NOW,
THEREFORE, in consideration of
the mutual covenants and agreements set forth in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties do hereby agree as follows:

 

SECTION 1. Purchase and
Sale of Notes and Shares

 

1.01                           Issuance and Sale of the Notes and Shares.  Subject
to the terms and conditions of this Agreement, the Purchasers agree to purchase
at the Closing (as hereafter defined), and the Company agrees to issue and sell
to the Purchasers at the Closing, the Notes and 166,665 Shares,

 

 

in the aggregate, of Common Stock for an
aggregate purchase price of One Million Dollars ($1,000,000) (the “Purchase
Price”).

 

1.02                           Terms
of the Notes.  The principal of each
Note shall bear interest at a rate of twelve (12%) percent per annum (the
“Principal Amount”).  The Principal
Amount and any accrued but unpaid interest shall become due and payable in one
equal payment upon the earlier of: (i) September 30, 2003 or (ii) upon the
closing of a sale (or series of related sales) by the Company of its equity
securities or warrant exercise resulting in net proceeds to the Company of not
less than One Million Three Hundred Thousand Dollars ($1,300,000)  (“Maturity Date”).  Interest on the Notes shall be paid
monthly.  The Company shall have the
right to pre-pay the Principal Amount and any accrued and unpaid interest
thereon at any time.  In the event the
Notes and any accrued and unpaid interest thereon are not pre-paid on or before
July 31, 2003, an additional 166,665 shares, in the aggregate, of Common Stock
shall be issued and delivered to the Purchasers on a pro rata basis (“Pre-Payment
Penalty Shares”).  If the Principal
Amount and/or the interest on the Notes is not paid by the Maturity Date, then
the Principal Amount shall bear interest at the annual rate of 18% and all
payments of the Principal Amount, accrued interest thereon, and other amounts
payable under the Notes, shall be immediately due and payable.  Furthermore, upon such default, an
additional 333,330 shares, in the aggregate, of Common Stock shall be issued
and delivered to the Purchasers, on a pro rata basis, on the date of default
(“Default Shares,” and together with the Pre-Payment Penalty Shares, the
“Contingent Shares”).

 

SECTION 2.    Closing.     At the
Closing (as defined in Section 3 hereof), the Company will sell to the
Purchasers, and the Purchasers will purchase from the Company, upon the terms
and conditions hereinafter set forth, the Notes in the Principal Amounts and
the number of Shares set forth on Exhibit A.  The issuance, sale and purchase of the Notes and Shares shall
occur at a closing (the “Closing”) to be held at the offices of Littman Krooks
LLP, 655 Third Avenue, New York, New York 10016, at such time as may be
mutually agreed upon by the Company and the Purchasers, but no later than June
23, 2003.  The date of Closing is hereinafter
referred to as the “Closing Date.”

 

SECTION 3.    Delivery
of the Notes and Shares at the Closing. On the Closing Date, the Company shall
issue and sell to each Purchaser, and each Purchaser severally (but not
jointly) agrees to purchase from the Company, such Notes and Shares for the
Purchase Price.  Each Purchaser’s
obligation to purchase a Note and Shares hereunder is distinct and separate
from each other Purchaser’s obligation to purchase, and no Purchaser shall be
required to purchase hereunder more than the amount set forth opposite such
Purchaser’s name on Exhibit A hereto, notwithstanding any failure by any
other Purchaser to purchase Notes and Shares hereunder, nor shall any Purchaser
have any liability by reason of any such failure by any other Purchaser.

 

At the
Closing, the Company shall deliver to each Purchasers one or more stock
certificates and a Note registered in the name of such Purchaser, or in such
nominee name(s) as designated by such Purchaser in writing, representing the number
of Shares and Principal Amount of the Note set forth opposite such Purchaser’s
name on Exhibit A hereto and each bearing an appropriate legend
indicating that the Notes and Shares were sold in reliance upon the exemptions
from registration under the Securities provided by Section 4(2) thereof
and Rule 506 thereunder.  The
name(s) in which the certificates are to be registered are set forth in the
Stock

 

2

 

Certificate Questionnaire
attached hereto as part of Appendix I. 
The Company’s obligation to complete the sale of the Notes and Shares
and deliver such stock certificate(s) and Notes to the Purchasers at the
Closing shall be subject to the following conditions only, any one or more of
which may be waived in writing by the Company: (a) the receipt by the
Company of same-day funds in the full amount of the purchase price for the
Notes and Shares being purchased hereunder and (b) the accuracy of the
representations and warranties made herein by the Purchasers as of the date
hereof and the fulfillment of the undertakings of the Purchasers set forth in
this Agreement to be fulfilled by them prior to the Closing.  The Purchaser’s obligation to accept
delivery of such stock and certificate(s) and Notes and to pay for the Notes
and Shares evidenced thereby shall be subject to the following conditions only:
(a) the accuracy of the representations and warranties made herein by the
Company as of the date hereof and as of the Closing Date as if made on such
date and (b) the fulfillment of the undertakings of the Company set forth
in this Agreement to be fulfilled by it prior to Closing.

 

SECTION 4.  Representations, Warranties and Covenants of the
Company.  The Company hereby represents and warrants
to, and covenants with, the Purchasers as follows that, except as disclosed or
incorporated by reference in, (i) the SEC Reports (as defined in Section 4.014
hereof) or (ii) the Disclosure Schedule to be delivered by the Company
prior to the execution and delivery of this Agreement (the “Disclosure
Schedule”):

 

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

 

Section 4.01 of the Disclosure Schedule
discloses all Special Purpose Entities (as defined below) owned directly or
indirectly, in whole or in part, by the Company or any of its affiliates or in
or with respect to which the Company or its affiliates have a direct or
indirect business relationship or interest of any kind, in whole or in part,
including any equity interest, any leasing relationship, any loan or other
financing relationship, any other contractual relationship or any other
economic interest, relationship or arrangement of any kind, where such interest
or interests are directly or indirectly related to, or part of, the business or
the assets owned by or the liabilities of the Company.  Section 4.01 of the Disclosure
Schedule hereto separately discloses any guarantees by the Company, its
subsidiaries or other affiliates of the liabilities of or with respect to any
Special Purpose Entities.  “Special
Purpose Entities” has the meaning given that term under U.S. accounting rules
governing consolidation, including proposed rules and interpretations of the
FASB, such as those contained in guidance (as proposed or as finally adopted)
interpreting Statement of Financial Accounting Standard 94, Consolidation of all Majority-Owned Subsidiaries
and Accounting Research Bulletin No. 51, Consolidated
Financial Statements.

 

4.02                           Authorized Capital
Stock.     The capitalization of the
Company as of March 31, 2003, including the authorized capital stock, the
number of shares issued and outstanding, the number of shares issuable and
reserved for issuance pursuant to stock option plans, the number

 

3

 

of shares issuable and reserved
for issuance pursuant to securities exercisable for, or convertible into or
exchangeable for any shares of capital stock, is set forth in Section 4.02
of the Disclosure Schedule.  All of such
outstanding shares of capital stock have been, or upon issuance will be,
validly issued, fully paid and nonassessable. 
No shares of capital stock of the Company are subject to preemptive
rights or any other similar rights of the stockholders of the Company or any
liens or encumbrances, pursuant to the Company’s Certificate of Incorporation
or bylaws or any agreement to which the Company is a party.  Except as set forth in Section 4.02
of the Disclosure Schedule, as of the date of this Agreement, (i) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exercisable or exchangeable for, any shares of capital
stock of the Company or any of its subsidiaries, or arrangements by which the
Company or any of its subsidiaries is or may become bound to issue additional
shares of capital stock of the Company or any of its subsidiaries, and (ii)
there are no agreements or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of its or their
securities under the Securities Act (except the Registration Rights
Agreement).  There are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Shares and/or Contingent Shares, if
applicable, in accordance with the terms of this Agreement.  The Company has furnished to each Purchaser
or made available to each Purchaser true and correct copies of the Company’s
Certificate of Incorporation as in effect on the date hereof, the Company’s
By-laws as in effect on the date hereof, and all other instruments and
agreements governing securities convertible into or exercisable or exchangeable
for capital stock of the Company.  As of
the date hereof, 166,665 shares of
Common Stock representing the Pre-Payment Penalty Shares shall have been
deposited into and held in an escrow account and subject to and in accordance
with the terms of that certain Escrow Agreement.  The Pre-Payment Penalty Shares have been duly authorized and,
upon release from the escrow account in accordance with the terms of the Escrow
Agreement, shall be validly issued, fully paid and nonassessable.

 

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

 

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

 

4.05                           Due Execution, Delivery and Performance of
Agreements.                          The
Company has all requisite corporate power and authority to enter into this
Agreement and the Notes, the Registration Rights Agreement and the Escrow
Agreement (hereinafter collectively referred to as the “Transaction Documents”)
and to perform the transactions contemplated hereby and thereby.  As of the date hereof, this Agreement and
the Transaction Documents have been duly authorized, executed and delivered by
the Company.  The execution, delivery
and performance of this

 

4

 

Agreement and the Transaction
Documents by the Company and the consummation of the transactions contemplated
hereby and thereby will not (i) violate any provision of the
organizational documents of the Company or (ii) result in the creation of
any lien, charge, security interest, adverse claim or encumbrance upon any assets
or properties of the Company pursuant to the terms or provisions of, or
conflict with, result in the breach or violation of, or constitute, either by
itself or upon notice or the passage of time or both, a default under
(A) any material agreement, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other material instrument to which the Company is
a party or by which the Company or any of its assets or properties may be
otherwise bound or affected or (B) any statute or any judgment, decree,
order, rule or regulation of any court or any regulatory body, administrative
agency or other governmental body applicable to the Company or any of its
properties.  No material consent,
approval, authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the execution and delivery of
this Agreement or the Transaction Documents or the consummation of the
transactions contemplated by this Agreement or the Transaction Documents,
except for compliance with the “blue sky” laws and Federal securities laws
applicable to the (i) Offering, (ii) resale of the Shares and
(iii) the issuance of the Contingency Shares.  Upon the execution and delivery by the Company of this Agreement
and the Transaction Documents, and assuming the valid execution and delivery
thereof by the Purchasers, this Agreement and the Transaction Documents
constitute valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors’ and contracting parties’ rights generally and except
as enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except as the indemnification agreements of the Company in Section 7.02
hereof may be held violative of public policy and therefore legally
unenforceable.

 

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

 

4.07                           No Defaults.                             Except as set forth in Section 4.07
of the Disclosure Schedule, the Company is not in violation or default of any
provision of its Certificate of Incorporation or any provision of its bylaws,
and, except for defaults, violations and breaches which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
it is not in breach of or default with respect to any provision of any
agreement, judgment, decree, order, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument to which it is a party or by
which it or any of its assets or properties are bound; and there does not exist
any state of fact known to the Company which, with notice or lapse of time or
both, would constitute an event of default or breach on the part of the Company
as provided in such documents, except such defaults which, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.

 

4.08                           No Actions.                                 Except as set forth in
Section 4.08 of the Disclosure Schedule, there are no legal or
governmental actions, suits or proceedings pending or threatened in writing to
which the Company is a party or of which any property owned or leased by the
Company is the subject, which actions, suits or proceedings, individually or in
the aggregate, prevent or could

 

5

 

reasonably be expected to
materially and adversely affect the transactions contemplated by this Agreement
or the Transaction Documents or to have a Material Adverse Effect; no material
labor disturbance by the employees of the Company exists or, to the best
knowledge of the Company, is imminent; and the Company is not party to or
subject to the provisions of any material injunction, judgment, decree or order
of any court, regulatory body, administrative agency or other governmental
body.

 

4.09                           No Material Change.                            Except as set forth on Section 4.09
of the Disclosure Schedule, since March 31, 2003, (i) the Company has not
incurred any known material liabilities or obligations, indirect or contingent,
or entered into any material verbal or written agreement or other transaction
which was not in the ordinary course of business or which could reasonably be
expected to have a Material Adverse Effect; (ii) the Company has not sustained
any material loss or interference with its businesses or properties from fire,
flood, windstorm, accident or other calamity not covered by insurance;
(iii) the Company has not paid, made or declared any dividends or other
distribution with respect to its capital stock; (iv) there has not been
any change in the capital stock of the Company or increase in indebtedness
material to the Company; and (v) the Company has not incurred or sustained
any other event or change that could reasonably be expected to have a Material
Adverse Effect.

 

4.010                     Intellectual Property.

 

(a)                                  Except
as set forth on Section 4.010 of the Disclosure Schedule, the
Company has ownership, license or legal right to use all material patent,
copyright, trade secret and trademark rights necessary to the conduct of the
business of the Company as now conducted (collectively, “Intellectual
Property”), other than intellectual property generally available on commercial
terms from other sources.

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

4.012                     Transaction Documents.            The Company has not
distributed and will not distribute prior to the Closing Date any material in
connection with the sale of the Notes and Shares.  The Company has not in the past nor will it hereafter take any
action to sell, offer for sale or solicit offers to buy any securities of the
Company which cause the offer, issuance or sale of the Notes or Shares, as
contemplated by this Agreement and the Transaction Documents to fail to qualify
for the exemptions of Section 4 of the Securities Act.

 

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

 

4.014                     SEC Reports; Financial Statements.   The Company has filed all reports required to
be filed by it under the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, for the two years preceding the date hereof (or such shorter
period as the Company was required by law to file such material) (the foregoing
materials being collectively referred to herein as the “SEC Reports” and,
together with the Disclosure Schedule the “Disclosure Materials”) on a timely
basis or has received a valid extension of such time of filing and has filed
any such SEC Reports prior to the expiration of any such extension.  As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the Commission
promulgated thereunder, and none of the SEC Reports, when filed, contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.  All material agreements to
which the Company is a party or to which the property or assets of the Company
are subject have been filed as exhibits to the SEC Reports to the extent
required.  The financial statements of
the Company included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (“GAAP”), except as may be
otherwise specified in such financial statements or the notes thereto, and
fairly present in all material respects the financial position of

 

7

 

the Company and its consolidated subsidiaries
as of and for the dates thereof and the results of operations and cash flows
for the periods then ended, subject, in the case of unaudited statements, to
normal, immaterial, year-end audit adjustments.  Except as set forth on Disclosure Schedule or except as
specifically disclosed in the SEC Reports, since March 31, 2003 (a) there
has been no event, occurrence or development that has had or that could
reasonably be expected to have or result in a Material Adverse Effect, (b) the
Company has not incurred any liabilities (contingent or otherwise) other than
(x) liabilities incurred in the ordinary course of business consistent with
past practice and (y) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (c) the Company has not altered its method of
accounting or the identity of its auditors and (d) the Company has not declared
or made any payment or distribution of cash or other property to its
stockholders or officers or directors (other than in compliance with existing
Company stock or stock option plans) with respect to its capital stock, or
purchased, redeemed (or made any agreements to purchase or redeem) any shares
of its capital stock.

 

4.015                     Legal Opinion.              The Company shall have used its best
efforts to deliver to the Purchasers a signed opinion of counsel to the
Company, dated as of the Closing Date, in form and substance reasonably
satisfactory to the Lenders.

 

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

 

4.017                     Escrow Agreement.                                         At the
Closing, the Company shall have executed and delivered the Escrow Agreement and
made a copy thereof available to the Purchaser.

 

4.018                     No Material, Non-public Information.                                   At
the time of the announcement of the transaction contemplated by the Transaction
Documents, as it may be amended will include no material non-public information
with respect to the Company.

 

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

 

(a)                                  Each
Purchaser represents and warrants to, and covenants with, the Company that:
(i) such Purchaser is knowledgeable, sophisticated and experienced in
making, and is qualified to make, decisions with respect to investments
representing an investment decision like that involved in the purchase of the
Notes and Shares and has requested, received, reviewed and considered all
information it deems relevant in making an informed decision to purchase the
Notes and Shares; (ii) such Purchaser is acquiring the Notes and Shares as
set forth in Section 2 above in the ordinary course of its business
and for its own account for investment only and with no present intention of
distributing any Notes or Shares or any arrangement or understanding

 

8

 

with any other persons regarding the
distribution of such Notes and Shares (this representation and warranty not
limiting each Purchaser’s right to resell pursuant to the Registration
Statement or, other than with respect to any claims arising out of a breach of
this representation and warranty, such Purchaser’s right to indemnification
under Section 7.02 hereof); (iii) each Purchaser will not,
directly or indirectly, offer, sell, pledge, sell short, transfer or otherwise
dispose of (or solicit any offers to buy, purchase or otherwise acquire or take
a pledge of) any of the Shares or Contingent Shares, if applicable, except in
compliance with each of the Securities Act, the Exchange Act, the Rules and
Regulations and the provisions hereof and all other applicable laws;
(iv) each Purchaser has completed or caused to be completed the
Registration Statement Questionnaire attached hereto as part of Appendix I
for use in preparation of the Registration Statement, and the answers thereto
are true and correct as of the date hereof and will be true and correct as of
the effective date of the Registration Statement and the Purchasers will notify
the Company immediately of any material change in any such information provided
in the Registration Statement Questionnaire occurring prior to the sale by it
of all of the Shares and/or Contingent Shares, if any; and (v) each Purchaser
has, in connection with its decision to purchase the Notes and Shares as set
forth in Section 2 above, relied solely upon the representations
and warranties of the Company contained herein.

 

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

 

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

 

9

 

(d)                                 Each
Purchaser understands that its investment in the Notes and Shares involves a
significant degree of risk and uncertainty and that the market price of the
Common Stock has been and may continue to be volatile and that no
representation or warranty is being made as to the future value or trading
volume of the Common Stock.  In
addition, each Purchaser understands that there is no assurance that the
Company will satisfy the criteria for continued quotation of the Common Stock
on The Nasdaq Stock Market.  Each
Purchaser has the knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of an investment in the Notes
and Shares and has the ability to bear the full economic risks of an investment
in the Notes and Shares.  Each Purchaser
is not relying on the Company or any of its employees, representatives or
agents with respect to the legal, tax, economic and related considerations as
to an investment in the Notes and Shares, and each Purchaser has relied on the
advice of, or has consulted with, only its own advisors.

 

(e)                                  Each
Purchaser understands that no United States Federal or state agency or any
other governmental agency has passed upon or made any recommendation or
endorsement of any of the Notes, Shares and/or Contingent Shares, if any.

 

(f)                                    Each
Purchaser understands that, until such time as a Registration Statement (as
defined in the Registration Rights Agreement) has been declared effective or
the Shares and/or Contingent Shares, if any, may be sold pursuant to
Rule 144(k) under the Securities Act without any restriction as to the
number of securities as of a particular date that can then be immediately
resold, the Shares and/or Contingent Shares, if any, shall bear a restrictive
legend in substantially the following form (and a stop-transfer order may be
placed against transfer of the certificates for the securities comprising the
Shares and/or Contingent Shares, if applicable):

 

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

 

The Purchasers
also understand that, until such time as the shares of Common Stock comprising
the Shares and/or Contingent Shares, if any, may be sold in accordance with Section 5(h)
below, such shares of Common Stock also shall bear an additional restrictive
legend in substantially the following form (and a stop-transfer order may be
placed against transfer of the certificates for the shares of Common Stock
comprising the Shares and/or Contingent Shares, if any):

 

THE TRANSFER OR SALE OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE IS
SUBJECT TO THE TERMS OF A PURCHASE AGREEMENT, INCLUDING SECTION 5(H) THEREOF,
DATED AS OF JUNE 23, 2003, A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE
COMPANY.

 

10

 

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

 

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

 

Subject, and
in addition, to the preceding paragraph, each Purchaser hereby covenants with
the Company not to make any resale or other disposition of any Shares and/or
Contingent Shares, if any, prior to such time that a Registration Statement may
become effective under the Securities Act unless (i) such sale is made
pursuant to a valid exemption from registration under the Securities Act,
(ii) the transferee or assignee thereof shall agree in writing also to be
bound by all of the provisions of this Agreement, (iii) each Purchaser
agrees in writing with the transferee or assignee to assign its rights under
this Agreement and copies of such agreements are furnished to the Company after
such assignment, (iv) the Company is furnished with written notice of the
name and address of such transferee or assignee, (v) the certificate
submitted to the transfer agent evidencing the Shares and/or Contingent Shares,
if any, is accompanied by a separate Purchaser’s Certificate of Subsequent Sale:
(a) in the form of Appendix III hereto, (b) executed by
such Purchaser (if a natural person) or, if not, by an officer of, or other
authorized person expressly designated by, such Purchaser and (c) to the
effect that the Shares and/or Contingent Shares, if any, have been sold in
accordance with a valid exemption from registration under the Securities Act
and any applicable State securities or “blue sky” laws, (vi) each
Purchaser shall have complied with all applicable provisions of this Agreement
and Transaction Documents relating to any resale of any Shares and/or
Contingent Shares, if any, (vii) following such transfer or assignment,
the further disposition of such securities by the transferee or assignee is
restricted under the Securities Act and applicable state securities laws and
(viii) if reasonably requested by the Company, each Purchaser shall have
furnished the Company with an opinion of counsel, reasonably satisfactory to
the Company, that such disposition will not require registration of the Shares
and/or Contingent Shares, if applicable, under the Securities Act.

 

Each Purchaser
acknowledges that there may occasionally be times when the Company must suspend
the use of the prospectus forming a part of either of the Registration
Statement (a “Suspension”) until such time as an amendment to the
Registration Statement has been filed by the Company and declared effective by
the Commission, or until such time as the Company has filed an appropriate
report with the Commission pursuant to the Exchange Act or appropriately
supplemented the prospectus forming a part of the Registration Statement. Each
Purchaser

 

11

 

hereby covenants that it will
not sell any Shares and/or Contingent Share, if any, pursuant to said
prospectus during the period commencing at the time at which the Company gives
each Purchaser written notice of the Suspension of the use of said prospectus
and ending at the time the Company gives the Purchaser written notice that the
Purchaser may thereafter effect sales pursuant to said prospectus, except as
permitted in Section 7.02(c) hereof; provided, however, that the
Purchaser shall be in compliance with the provisions contained in Section 7.02(b)
hereof, and provided  further that the Company will use its
commercially reasonable efforts to cause the prospectus so suspended to be
promptly resumed.

 

(i)                                     Each
Purchaser further represents and warrants to, and covenants with, the Company
that (i) each Purchaser has full right, power, authority and capacity to
enter into this Agreement and to consummate the transactions contemplated
hereby and thereby and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement and the Transaction
Documents, and (ii) upon the execution and delivery by each Purchaser of
this Agreement, this Agreement shall constitute legal, valid and binding
obligations of each Purchaser, enforceable in accordance with their respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
the indemnification agreements of such Purchaser contained in Section 7.03
hereof may be held violative of public policy and legally unenforceable.

 

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

 

12

 

judgment, injunction, law,
rule, regulation, agreement or controlling document to which each Purchaser is
a party or by which it is otherwise bound.

 

(j)                                     Such
Purchaser is unaware of, is no way relying on, and did not become aware of the
investment contemplated by the Notes or the Agreement through or as a result
of, any form of general solicitation or general advertising including, without
limitation, any article, notice, advertisement or other communication published
in any newspaper, magazine or similar media or broadcast over television or
radio, in connection with the investment contemplated by the notes or the
Agreement and is not purchasing the Notes, Shares or Contingency Shares, and
did not become aware of the investment contemplated by the notes or the
Agreement, through or as a result of any seminar or meeting to which the
Purchaser was invited by, or any solicitation of a subscription by, a person
not previously known to the Purchaser in connection with investments in
securities generally.

 

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

 

SECTION 6.                             Survival of Representations,
Warranties and Agreements.  Notwithstanding
any investigation made by any party to this Agreement, all covenants,
agreements, representations and warranties made by the Company and the
Purchaser herein and in the certificates delivered pursuant hereto shall
survive the Closing, the delivery to the Purchaser of the Notes and Shares
being purchased and the payment therefor; provided, however, that
the representations and warranties of the Company contained in Section 4
hereof (other than Section 4.012, which shall survive indefinitely) shall
terminate on June 23, 2004.

 

SECTION 7.                            Registration of the Shares and/or
Contingent Shares; Compliance with the Securities Act. The Purchasers are entitled to certain
“piggy-back” registration rights for the Shares and/or Contingent Shares, if
applicable, which are more fully set forth in that certain registration rights
agreement between the Company and the Purchasers of even date herewith (the
“Registration Rights Agreement”).

 

7.01                         Transfer of Shares and/or Contingent Shares Before
and After Effectiveness of a Registration Statement.

 

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

 

13

 

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

 

7.02                           Indemnification. For the purpose of this
Section 7.02:

 

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

 

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

 

(a)                                  The
Company agrees to indemnify and hold harmless, and pay and/or reimburse, each
of the Purchasers and each Purchaser/Affiliate, against any losses, claims,
damages, liabilities or expenses, to which such Purchasers or such
Purchaser/Affiliates may become subject, under the Securities Act, the Exchange
Act, or any other Federal or state law or regulation, at common law or
otherwise (including in settlement of any claims or litigation, if such settlement
is effected with the written consent of the Company), insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in either of the
Registration Statement, as amended at the time of effectiveness of the
Registration Statement, including any information deemed to be a part thereof
as of the time of effectiveness pursuant to paragraph (b) of
Rule 430A, or pursuant to Rule 434, of the Rules and Regulations, or
the prospectus, in the form first filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations, or filed as part of either of
the Registration Statement at the time of effectiveness if no Rule 424(b)
filing is required (the “Prospectus”), or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state in
any of them a material fact required to be stated therein or necessary to make
the statements in the Registration Statement or any amendment or supplement
thereto not misleading or in the Prospectus or any amendment or supplement
thereto not misleading in the light of the circumstances under which they were
made, or arise out of or are based in whole or in part on any material
inaccuracy in the representations and warranties of the Company contained in
this Agreement or the Transaction Documents, or any failure of the Company to
perform in all material respects its obligations hereunder or under law, and
will reimburse each Purchaser and each such Purchaser/Affiliate for any legal
and other expenses as such expenses are reasonably incurred by such Purchaser
or such Purchaser/Affiliate in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage, liability or
expense arises out of or is based upon (i) an untrue statement or alleged
untrue statement or omission or alleged omission made in the Registration
Statement, the Prospectus or any amendment or supplement thereto in reliance

 

14

 

upon and in conformity with written
information furnished to the Company by or on behalf of the Purchaser expressly
for use therein, (ii) the failure of such Purchaser to comply with the
covenants and agreements contained in this Agreement (including, without
limitation, Section 5(h) hereof and the Registration Rights Agreement
hereof in respect of the resale of Shares and/or Contingent Shares, if any) or
to perform its obligations under law, (iii) the inaccuracy of any
representations or warranties made by such Purchaser in this Agreement or
(iv) any statement or omission in any Prospectus or any amendment or
supplement thereto that is corrected in any subsequent Prospectus or any
amendment or supplement thereto that was delivered to the Purchaser reasonably
prior to the pertinent sale or sales by the Purchaser.

 

(b)                                 Each
Purchaser will severally, but not jointly, indemnify and hold harmless, and pay
and/or reimburse, the Company, each of its directors, each of its officers who
signed a Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, against any losses, claims, damages,
liabilities or expenses to which the Company, each of its directors, each of
its officers who signed a Registration Statement or controlling person may
become subject, under the Securities Act, the Exchange Act, or any other
Federal or state law or regulation, at common law or otherwise (including in
settlement of any claim or litigation, if such settlement is effected with the
written consent of such Purchaser), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon (i) any failure by the Purchaser to comply
with the covenants and agreements contained in this Agreement (including Section
5(h) hereof in respect of the resale of Shares and/or Contingent Shares, if
any) or the Registration Rights Agreement or to perform its obligations under
law, (ii) the inaccuracy of any representations or warranties made by such
Purchaser herein or (iii) any untrue or alleged untrue statement of any
material fact contained in a Registration Statement, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements in a Registration Statement or any
amendment or supplement thereto not misleading or in the Prospectus or any
amendment or supplement thereto not misleading in the light of the
circumstances under which they were made, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in a Registration Statement, the
Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by the Purchaser
expressly for use therein, and will reimburse the Company, each of its
directors, each of its officers who signed a Registration Statement or
controlling person for any legal and other expense reasonably incurred by the
Company, each of its directors, each of its officers who signed the Registration
Statement or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action. Notwithstanding any other provisions of this Section 7.02(b),
no Purchaser shall be required to indemnify any party in excess of the gross
proceeds paid by such Purchaser for Notes and Shares purchased pursuant to its
respective Agreement or if the Purchaser shall resell Shares and/or Contingent
Shares, if any, pursuant to a Registration Statement, if greater, the net
proceeds received by the Purchaser from those resales.

 

(c)  Promptly
after receipt by an indemnified party under this Section 7.02 of
notice of the threat or commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section 7.02, promptly notify the

 

15

 

indemnifying party in writing
thereof; however, the failure to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party for
contribution or otherwise under this Section 7.02 to the extent the
indemnifying party is not prejudiced as a result of such failure. In case any
such action is brought against any indemnified party and such indemnified party
seeks or intends to seek indemnity from an indemnifying party, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with all other indemnifying parties similarly notified, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party
and, after notice from the Indemnifying Party to the Indemnified Party of its
election to assume the defense thereof, the Indemnifying Party shall not be
liable to such Indemnified Party for any fees of counsel or any other expenses,
in each case subsequently incurred by such Indemnified Party in connection with
the defense thereof; provided, however, if the defendants in any such action include
both the indemnified party and the indemnifying party and, based upon the
advice of such indemnified party’s counsel, the indemnified party shall have
reasonably concluded that there may be a conflict of interest between the
positions of the indemnifying party and the indemnified party in conducting the
defense of any such action or that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assume such legal defenses
and to otherwise participate in the defense of such action on behalf of such
indemnified party or parties.

 

If the
indemnifying party elects to compromise or defend an asserted liability, it
shall promptly, but in any event within ten (10) days (or sooner, if the
nature of the asserted liability so requires), notify the indemnified party of
its intent to do so, and the indemnified party shall reasonably cooperate, at
the request and reasonable expense of the indemnifying party, in the compromise
of, or defense against, such asserted liability. The indemnifying party will
not be released from any obligation to indemnify the indemnified party
hereunder with respect to a claim without the prior written consent of the
indemnified party, unless the indemnifying party delivers to the indemnified
party a duly executed agreement settling or compromising such claim with no
monetary liability to or injunctive relief against the indemnified party and a
complete release of the indemnified party with respect thereto. The
indemnifying party shall have the right, except as provided below in this
subsection, to conduct and control the defense of any third-party claim made
for which it has been provided notice hereunder. Upon receipt of written notice
from the indemnifying party to such indemnified party of its election so to
assume the defense of such action and reasonable approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified
party under this Section 7.02 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed such counsel
in connection with the assumption of legal defenses in accordance with the
proviso to the preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, representing the indemnified parties who are parties to such
action, plus local counsel, if appropriate) or (ii) the indemnifying party
shall not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after notice
of commencement of action, in each of which cases the reasonable fees and
expenses of counsel shall be at the expense of the indemnifying party.

 

16

 

(d)                                 If
the indemnification provided for in this Section 7.02 is required
by its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under subsections
(a) or (b) of this Section 7.02 in respect of any losses,
claims, damages, liabilities or expenses referred to herein, then each
applicable indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of any losses, claims, damages, liabilities
or expenses referred to herein (i) in such proportion as is appropriate to
reflect the relative economic benefits received by the Company and the
Purchaser from the placement of the Notes and Shares contemplated by this
Agreement or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but
the relative fault of the Company and the Purchaser in connection with the
statements or omissions or inaccuracies in the representations and warranties
in this Agreement or the Transaction Documents that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations.  The relative
benefits received by the Company, on the one hand, and each Purchaser, on the
other, shall be deemed to be in the same proportion as the amount paid by such
Purchaser to the Company pursuant to this Agreement for the Shares purchased by
such Purchasers that are resold pursuant to the Registration Statement bears to
the difference (the “Difference”), if any, between the amount such Purchaser
paid for the Shares, that are sold pursuant to a Registration Statement and the
amount received by such Purchaser from such resale.  The relative fault of the Company, on the one hand, and each
Purchaser, on the other, shall be determined by reference to, among other
things, whether the untrue or alleged statement of a material fact or the
omission or alleged omission to state a material fact or the inaccurate or the
alleged inaccurate representation and/or warranty relates to information
supplied by the Company or by such Purchaser and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such statement
or omission and/or its distribution. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
subsection (c) of this Section 7.02, any legal or other fees
or expenses reasonably incurred by such party in connection with investigating
or defending any action or claim. The provisions set forth in subsection
(c) of this Section 7.02 with respect to the notice of the threat
or commencement of any action shall apply if a claim for contribution is to be
made under this subsection (d); provided, however, that no additional notice
shall be required with respect to any threat or action for which notice has
been given under subsection (c) for purposes of indemnification. The
Company and the Purchaser agree that it would not be just and equitable if
contribution pursuant to this Section 7.02 were determined solely
by pro rata allocation (even if the Purchaser were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in this paragraph. Notwithstanding
the provisions of this Section 7.02, no Purchaser shall be required
to contribute any amount in excess of the amount by which the Difference
exceeds the amount of any damages that such Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Purchasers’ obligations to contribute pursuant to this Section 7.02
are several and not joint.

 

7.03                           Termination of Conditions and
Obligations.    The restrictions imposed by Section 5(h)
hereof and this Section 7 upon the transferability of the Shares
and/or Contingent

 

17

 

Shares, if any, shall cease and
terminate as to any particular number of the Shares and/or Contingent Shares,
if any, upon (i) the passage of two (2) years from the date of their
issuances, (ii) such time as they become eligible for sale pursuant to
Rule 144(k) under the Securities Act or another similar exemption under the
Securities Act or (iii) or at such time as an opinion of counsel
reasonably satisfactory in form and substance to the Company shall have been
rendered to the effect that such conditions are not necessary in order to
comply with the Securities Act.

 

7.04                           Information Available.                     So long as a Registration
Statement is effective covering the resale of Shares and/or Contingent Shares,
if any, owned by the Purchaser, the Company will furnish or otherwise make
available to the Purchasers:

 

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

 

(b)                                 upon
the request of the Purchaser, all exhibits in the form filed with the
Commission excluded by the parenthetical to Section 7.04(a)(vi);
and

 

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

 

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

 

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

 

SECTION 8.                                                           The
Company and the Purchasers appoint Computershare Trust Company, Inc. to act as
the as their escrow agent to hold and to release the Pre-Payment Penalty Shares
on the terms and conditions set forth in the Escrow Agreement.

 

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

 

18

 

	
   

  	
  if to the
  Company, to:

  
	
  (a)

  	
   

  
	
   

  	
  The Immune
  Response Corporation

  5931 Darwin Court

  Carlsbad, California 92008

  Attention: President

  Facsimile: (760) 431-8636

  
	
   

  	
   

  
	
   

  	
  with a copy
  to:

  
	
   

  	
   

  
	
   

  	
  Pillsbury
  Winthrop LLP

  50 Fremont Street

  San Francisco, CA 94105-2228

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

  Facsimile: (415) 983-1200

  

 

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

 

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

 

SECTION 10.                     Changes.                                             This
Agreement may not be modified or amended except pursuant to an instrument in
writing signed by the Company and holders of a majority in interest of the
outstanding Notes.

 

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

 

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

 

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

 

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

 

SECTION 15.                     Entire Agreement.                                           This
Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the

 

19

 

Company nor the Purchaser makes
any representation, warranty, covenant or undertaking with respect to any such
matters.

 

SECTION 16.                     Third Party Beneficiaries.                                                 Subject
to Section 7.03 hereof, this Agreement is intended for the benefit
of the parties hereto and their respective successors and permitted assigns,
and is not for the benefit of, nor may any provision hereof be enforced by, any
other person.

 

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

 

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

 

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

 

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

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

20

 

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

 

	
   

  	
  THE IMMUNE
  RESPONSE CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

21

 

EXHIBIT A

 

LIST OF PURCHASERS AND NOTES AND SHARES
PURCHASED

 

	
  Name and Address

  of Initial Purchasers

  	
   

  	
  No. of
  Shares of

  Common Stock

  	
   

  	
  Principal
  Amount of

  Notes

  	
   

  	
  Aggregate

  Purchase Price

  	
   

  
	
  Capital Growth Equity Fund I, LLC

  225 NE Mizner Boulevard

  Suite 750

  Boca Raton, Florida 33432

  Attn: Monique MacLaren

  	
   

  	
  50,000

  	
   

  	
  $

  	
  300,000

  	
   

  	
  $

  	
  300,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Edward A. Haymes

  7108 Queenferry Circle

  Boca Raton, Florida 33496

  	
   

  	
  6,000

  	
   

  	
  $

  	
  36,000

  	
   

  	
  $

  	
  36,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Gerald & Seena Sperling

  17899 Aberdeen Way

  Boca Raton, Florida 33496

  	
   

  	
  8,333

  	
   

  	
  $

  	
  50,000

  	
   

  	
  $

  	
  50,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Steve Oliveira

  18 Fieldstone Court

  New City, New York 10956

  	
   

  	
  58,333

  	
   

  	
  $

  	
  350,000

  	
   

  	
  $

  	
  350,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lincoln Associates LLC

  535 Madison Avenue

  New York, New York 10022

  Attn: William P. Dioguardi

  	
   

  	
  9,500

  	
   

  	
  $

  	
  57,000

  	
   

  	
  $

  	
  57,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Garfield Associates LLC

  535 Madison Avenue

  New York, New York 10022

  Attn: William P. Dioguardi

  	
   

  	
  9,500

  	
   

  	
  $

  	
  57,000

  	
   

  	
  $

  	
  57,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Alex Tringas

  29 Eigin Parkway

  Ft. Walton Beach, Florida 32548

  	
   

  	
  8,333

  	
   

  	
  $

  	
  50,000

  	
   

  	
  $

  	
  50,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ark Venture Capital, Inc.

  6400 NW 6th Way

  Suite 300 Ft. Lauderdale, Florida 33309

  Attn: Robert D. Keyser, Jr.

  	
   

  	
  16,666

  	
   

  	
  $

  	
  100,000

  	
   

  	
  $

  	
  100,000

  	
   

  
	
  Total

  	
   

  	
  166,665

  	
   

  	
  $

  	
  1,000,000

  	
   

  	
  $

  	
  1,000,000

  	
   

  

 

22

 

EXHIBIT
B

 

FINANCING SIGNATURE PAGE

 

By execution and delivery of this signature
page, the undersigned hereby agrees to become a Purchaser, as defined in that
certain Purchase Agreement (the “Purchase Agreement”) by and among The Immune
Response Corporation, a Delaware corporation (the “Company”), and the
Purchasers (as defined in the Purchase Agreement), dated as of the Closing Date
(as defined in the Purchase Agreement), acknowledges having read the
representations in the Purchase Agreement section entitled “Representations of
the Purchasers,” and hereby represents that the statements contained therein
are complete and accurate with respect to the undersigned as a Purchaser.  The undersigned further hereby agrees to be
bound by the terms and conditions of (i) the Purchase Agreement as a
“Purchaser” thereunder and (ii) the Registration Rights Agreement (as defined
in the Purchase Agreement) as a “Purchaser” thereunder, and authorizes this
signature page to be attached to the Purchase Agreement and the Registration
Rights Agreement, or counterparts thereof.

 

Executed, in counterpart, as of the date set forth below.

 

	
   

  	
  PURCHASER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name of
  Purchaser

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Contact
  Person:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Telephone
  No.:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Fax No.:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  E-mail Address:

  	
   

  	
   

  
												

 

23

 

APPENDIX I

 

THE IMMUNE RESPONSE CORPORATION

 

STOCK CERTIFICATE QUESTIONNAIRE

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

 

	
  1.

  	
  The exact
  name that your Notes, Shares and/or Contingent Shares, if applicable, are to
  be registered in (this is the name that will appear on your stock
  certificate(s)). You may use a nominee name if appropriate:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  The
  relationship between the Purchaser of the Notes, Shares and/or Contingent
  Shares, if applicable and the Registered Holder listed in response to
  item 1 above:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 

24

 

Appendix I-1

 

THE IMMUNE RESPONSE CORPORATION

 

REGISTRATION STATEMENT QUESTIONNAIRE

 

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

 

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

 

	
   

  

 

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

 

	
   

  

 

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

 

o
Yes     o No

 

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

 

	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  

 

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

 

o
Yes     o No

 

If “yes,”
please below:

 

	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  

 

 

 

25

 

Appendix I-2

 

THE IMMUNE RESPONSE CORPORATION

 

GLOSSARY OF TERMS

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

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

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

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

 

26

 

APPENDIX II

 

Accredited Investor
Certification

Initial the appropriate item(s)

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

 

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

 

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

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

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

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

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

 

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

 

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

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

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

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

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

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

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

 

Appendix II-1

 

27

 

APPENDIX III

Attention:

 

PURCHASER’S CERTIFICATE OF
SUBSEQUENT SALE

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

 

 

	
   

  	
   

  	
  hereby
  certifies

  
	
  [fill in
  official name of individual or institution]

  	
   

  	
   

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

  
	
  and as such,
  sold such shares on

  	
   

  	
   

  	
  in
  accordance with [Registration Statement

  
	
   

  	
  [date]

  	
   

  	
   

  
	
  number 333-

  	
   

  	
   

  	
  ] [a valid
  exemption (i.e.,

  	
   

  	
   

  	
  ) from

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

  
												

Print or Type:

 

	
   

  	
  Name of

  Purchaser

  (Individual or

  Institution):

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name of

  Individual

  Representing

  Purchaser (if

  an Institution):

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title of

  Individual

  Representing

  Purchaser (if

  an Institution):

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature by

  Individual

  Purchaser, or

  Representative

  of Purchaser:

  	
   

  	
   

  

 

 

28

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