-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E/DieLOSnba2leK3non1KugubvUkBnR2TgzJBX5x0PF8d8PaT4Xq+JzxU718GEgh M5AwFnQeEkXlRDMDtzxWWw== 0000898432-06-000701.txt : 20060811 0000898432-06-000701.hdr.sgml : 20060811 20060811101656 ACCESSION NUMBER: 0000898432-06-000701 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20060811 DATE AS OF CHANGE: 20060811 GROUP MEMBERS: ALAN FOGELMAN SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: IMMUNE RESPONSE CORP CENTRAL INDEX KEY: 0000817785 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 330255679 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-45513 FILM NUMBER: 061023248 BUSINESS ADDRESS: STREET 1: 5931 DARWIN COURT CITY: CARLSBAD STATE: CA ZIP: 92008 BUSINESS PHONE: 7604317080 MAIL ADDRESS: STREET 1: 5931 DARWIN COURT CITY: CARLSBAD STATE: CA ZIP: 92008 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: QUBIT HOLDINGS LLC CENTRAL INDEX KEY: 0001336153 IRS NUMBER: 201636991 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 535 MADISON AVENUE STREET 2: 18TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 212-326-9200 MAIL ADDRESS: STREET 1: 535 MADISON AVENUE STREET 2: 18TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 SC 13D 1 schedule13d.txt UNITED STATES OMB APPROVAL SECURITIES AND EXCHANGE COMMISSION ------------ WASHINGTON, DC 20549 OMB Number: 3232-0145 Expires: February 28, 2006 Estimated average burden hours per response.......15 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. __)* NAME OF ISSUER: The Immune Response Corporation TITLE OF CLASS OF SECURITIES: Common Stock, par value $.0025 per share CUSIP NUMBER: 45252T10 NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS: Qubit Holdings LLC Attn: Alan Fogelman c/o 535 Madison Avenue, 18th Floor New York, NY 10022 Tel: (212) 355-5565 Fax: 212-751-3483 DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT: April 11, 2006 If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box: [ ]. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP NO.: 45252T10 1. NAME OF REPORTING PERSON: Qubit Holdings LLC 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) (b) x 3. SEC USE ONLY 4. SOURCE OF FUNDS: WC 5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e): Yes No X 6. CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware 7. SOLE VOTING POWER: 0 shares Number of Shares Bene- ficially Owned 8. SHARED VOTING POWER: 50,000,000 shares by Each Reporting Person 9. SOLE DISPOSITIVE POWER: 0 shares With 10. SHARED DISPOSITIVE POWER: 50,000,000 shares 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 50,000,000 shares 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: Yes No x 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 16.44% 14. TYPE OF REPORTING PERSON: OO CUSIP NO.: 45252T10 1. NAME OF REPORTING PERSON: Alan Fogelman 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) (b) x 3. SEC USE ONLY 4. SOURCE OF FUNDS: OO 5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e): Yes No X 6. CITIZENSHIP OR PLACE OF ORGANIZATION: United States Number of 7. SOLE VOTING POWER: 0 shares Shares Bene- ficially Owned 8. SHARED VOTING POWER: 50,000,000 shares by Each Reporting Person 9. SOLE DISPOSITIVE POWER: 0 shares With 10. SHARED DISPOSITIVE POWER: 50,000,000 shares 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 50,000,000 shares 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: Yes No x 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 16.44% 14. TYPE OF REPORTING PERSON: IN ITEM 1. SECURITY AND ISSUER This Statement relates to the common stock, $0.0025 par value per share (the "Common Stock"), of The Immune Response Corporation, a Delaware corporation (the "Company"), whose principal executive offices are located at 5931 Darwin Court, Carlsbad, California 92008. ITEM 2. IDENTITY AND BACKGROUND (a) This report is being filed by each of Qubit Holdings LLC and Alan Fogelman. (b) The business address of Qubit Holdings LLC is c/o 535 Madison Avenue, New York, New York 10022. The business address of Alan Fogelman is 222-04 77th Avenue, Oakland Gardens, New York 11364. (c) Alan Fogelman's present principal occupation is tax and financial planning specialist. (d) Neither Qubit Holdings LLC nor Alan Fogelman has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) Neither Qubit Holdings LLC nor Alan Fogelman has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) Qubit Holdings LLC is a Delaware limited liability company. Alan Fogelman is an individual of United States citizenship. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION Alan Fogelman (the "Manager") is the sole non-member manager of Qubit Holdings LLC ("Qubit"). Pursuant to Qubit's operating agreement, the Manager has voting and dispositive power as to the securities held by Qubit. On February 9, 2006, pursuant to the contingency described below, the Company entered into a Securities Purchase Agreement with Qubit. In exchange for $250,000 cash, the Company issued to Qubit a $250,000 promissory note (the "Note"), secured by substantially all of the Company's assets, bearing interest at 8% per annum, maturing on January 1, 2008, and convertible into Common Stock at $0.02 per share, plus 37,500,000 warrants to purchase shares of Common Stock at $0.02 per share (the "Warrants"). Pursuant to the Securities Purchase Agreement, Qubit also granted the Company the right to, until August 8, 2006, cause Qubit to purchase an additional $250,000 secured convertible note of like tenor and an additional 37,500,000 warrants of like tenor, and to thereupon receive another $250,000 cash. At that time, the Company advised Qubit that the Company did not have enough authorized but unissued shares of Common Stock to enable the conversion or exercise of the derivative securities issued or issuable to Qubit. The Company indicated that it would use reasonable best efforts, including calling and convening a special meeting of its stockholders to amend the Company's certificate of incorporation and soliciting proxies to effectuate such amendment, to cause there to be a sufficient number of authorized shares of its Common Stock available for issuance upon full conversion of the Note and the Warrants held by Qubit. As disclosed on its Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 17, 2006, on April 11, 2006, the Company obtained stockholder approval for and effectuated, by making the appropriate filing with the Delaware Secretary of State, an amendment of its certificate of incorporation to increase its authorized number of shares of Common Stock from 170,000,000 to 3,500,000,000. As of that date, the Company had a sufficient number of authorized but unissued shares of Common Stock to enable the conversion or exercise of all of its outstanding derivative securities, in accordance with their terms. On August 2, 2006, in exchange for $250,000, Qubit exercised 12,500,000 Warrants at $0.02 per share and acquired 12,500,000 shares of Common Stock. ITEM 4. PURPOSE OF TRANSACTION Qubit has acquired its holdings of the Company's securities described above for investment purposes. Qubit may, from time to time, depending on market conditions regulatory and other factors deemed relevant by Qubit and the Manager, acquire additional holdings of the Company's securities. Qubit reserves the right to, and may in the future choose to, change the purpose of its investment and take such actions as it deems appropriate in light of the circumstances, including, without limitation, to convert some or all of the Notes and/or exercise some or all of the Warrants for shares of Common Stock (subject to the availability for issuance of Common Stock) and/or to dispose of, in the open market, in a private transaction or by gift or otherwise, all or a portion of the Note(s), the Warrants and/or the shares of Common Stock received upon such conversion or exercise and/or such other securities of the Company that Qubit may hereafter acquire. Neither Qubit nor the Manager presently has any plans or proposals that relate to or would result in any of the following: (d) Any change in the present Board of Directors or management of the Company; (e) Any material change in the present capitalization or dividend policy of the Company; (f) Any other material change in the Company's business or corporate structure; (g) Any changes in the Company's charter, By-laws, or instruments corresponding thereto or other actions that may impede the acquisition of control of the Company by any person; (h) A class of securities of the Company being delisted from a national securities exchange or ceasing to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) A class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act; or (j) Any action similar to any of those enumerated above. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a) The aggregate percentage of shares of Common Stock reported beneficially owned by Qubit is based upon 254,108,685 shares outstanding, which is the total number of shares of Common Stock outstanding as of May 5, 2006, as disclosed by the Company. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission, based on voting and investment power with respect to shares. Shares of Common Stock subject to options, notes or warrants currently exercisable, or exercisable within 60 days after the date of this Statement, are deemed outstanding for computing the percentage ownership of Qubit, but are not deemed outstanding for computing the percentage ownership of any other person. As of the date of this Statement, Qubit is a beneficial owner of 50,000,000 shares of Common Stock, which represented approximately 16.44% of the issued and outstanding number of shares of Common Stock as of May 5, 2006. Specifically, Qubit is a beneficial owner of 12,500,000 shares of Common Stock issuable upon conversion of the Note, 25,000,000 shares of Common Stock issuable upon the exercise of the unexercised portion of the Warrants, and 12,500,000 shares of Common Stock issued upon the August 2, 2006 exercise of Warrants. For the reasons indicated above, the Manager may be deemed to beneficially own the 50,000,000 shares of Common Stock beneficially owned by Qubit, representing 16.44% of such class of securities. (b) Qubit and the Manager have shared power to vote and dispose of all shares of Common Stock beneficially owned by Qubit. (c) See Item 3 above. (d) No person other than Qubit is known to have the right to receive, and no person other than Qubit and the Manager, is known to have the power to direct the receipt of, dividends from or the proceeds from the sale of such shares of Common Stock. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER The information contained in Item 3 hereof is hereby incorporated by reference to this Item 6. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS 99.1 An agreement relating to the filing of a joint statement as required by Rule 13d-1(k)(1)(iii) under the Securities Exchange Act of 1934. 99.2 Securities Purchase Agreement, dated as of February 9, 2006, between the Company and Qubit. 99.3 8% Senior Secured Convertible Promissory Note of the Company, in the principal amount of $250,000, issued on February 9, 2006 to Qubit. 99.4 Stock Purchase Warrant of the Company, issued on February 9, 2006, to Qubit, to purchase 37,540,000 shares of Common Stock. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: August 11, 2006 Qubit Holdings LLC By: /s/ Alan Fogelman ----------------- Name: Alan Fogelman Title: Non-Member Manager /s/ Alan Fogelman -------------------------- Alan Fogelman EXHIBIT INDEX 99.1 An agreement relating to the filing of a joint statement as required by Rule 13d-1(k)(1)(iii) under the Securities Exchange Act of 1934. 99.2 Securities Purchase Agreement, dated as of February 9, 2006, between the Company and Qubit. 99.3 8% Senior Secured Convertible Promissory Note of the Company, in the principal amount of $250,000, issued on February 9, 2006 to Qubit. 99.4 Stock Purchase Warrant of the Company, issued on February 9, 2006, to Qubit, to purchase 37,540,000 shares of Common Stock. EX-99 2 exhibit99.txt EXHIBIT 99-1 Exhibit 99.1 AGREEMENT The undersigned agree that this Schedule 13D, dated as of the date hereof, relating to the Common Stock, par value $0.0025 per share, of The Immune Response Corporation, shall be filed on behalf of the undersigned. Date: August 11, 2006 Qubit Holdings LLC By: /s/ Alan Fogelman ------------------ Name: Alan Fogelman Title: Non-Member Manager /s/ Alan Fogelman --------------------------- Alan Fogelman EX-99 3 irc_exh99-2.txt EXHIBIT 99.2 Exhibit 99.2 - -------------------------------------------------------------------------------- THE IMMUNE RESPONSE CORPORATION SECURITIES PURCHASE AGREEMENT DATED AS OF FEBRUARY 9, 2006 WITH RESPECT TO 8% SECURED CONVERTIBLE PROMISSORY NOTE AND WARRANT - -------------------------------------------------------------------------------- SECURITIES PURCHASE AGREEMENT This SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of February 9, 2006, by and between THE IMMUNE RESPONSE CORPORATION, a Delaware corporation (the "Company") and QUBIT HOLDINGS, LLC (the "Purchaser"); WHEREAS, the Company desires to sell to the Purchaser, and the Purchaser desires to purchase from the Company, for $250,000 in cash an 8% senior secured convertible promissory note substantially in the form of EXHIBIT A hereto (the "Note") in the principal amount of $250,000; WHEREAS, the Company desires to have the right to sell to the Purchaser for $250,000 in cash an 8% senior secured convertible promissory note of like tenor to the Note (the "Second Note") in the principal amount of $250,000 and the Purchaser desires to grant the Company the right to cause the Purchaser to purchase for $250,000 in cash the Second Note; WHEREAS, to induce the Purchaser to purchase the Note, the Company will issue to the Purchaser a warrant substantially in the form of EXHIBIT B hereto (the "Warrant") to purchase 37,500,000 shares of common stock, par value $0.0025 per share, of the Company (the "Common Stock") with an initial exercise price of $0.02 per share; and WHEREAS, to induce the Purchaser to grant the put right for the Second Note, the Company agrees that upon exercise of such put right it will also issue to the Purchaser a warrant of like tenor to the Warrant (the "Second Warrant") to purchase 37,500,000 shares of Common Stock with an initial exercise price of $0.02 per share. 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 Company and the Purchaser hereby agree as follows: 1. AUTHORIZATION; SALE OF NOTES AND WARRANTS ----------------------------------------- 1.1 AUTHORIZATION. The Company has, or before the Closing (as defined in Section 2.3) will have, duly authorized the sale and issuance, pursuant to the terms of this Agreement, of the Note, the Second Note, the Warrant and the Second Warrant. 1.2 SALE OF NOTE AND WARRANT. Subject to the terms and conditions of this Agreement, at the Closing, the Company will sell, and the Purchaser will purchase, the Note and the Warrant. 1.3 SALE AND PURCHASE THE SECOND NOTE AND SECOND WARRANT. Subject to the terms and conditions of this Agreement, the Purchaser hereby agrees to purchase the Second Note and the Second Warrant as soon as is commercially reasonable after the date on which the Company gives written notice (the "Company Notice") to the Purchaser of its desire to sell the Second Note and the Second Warrant; PROVIDED, that the Company gives such notice prior to the date that is six (6) months after the date hereof. For avoidance of doubt, the Purchaser shall not be obligated to purchase the Second Note and the Second Warrant if the Company fails to give such written notice to the Purchaser prior to the date that is six (6) months after the date hereof. 1 2. PURCHASE PRICE; CLOSINGS. ------------------------- 2.1 PURCHASE PRICE OF NOTE AND WARRANT. The purchase price (the "Purchase Price") to be paid by the Purchaser to the Company to acquire the Note and Warrant shall be $250,000. 2.2 PURCHASE PRICE OF SECOND NOTE AND WARRANT. The purchase price (the "Second Purchase Price"} to be paid by the Purchaser to the Company to acquire the Second Note and the Second Warrant shall be $250,000. 2.3 THE CLOSING. Subject to the terms and conditions of this Agreement, the closing (the "Closing") of the sale and purchase of the Note and Warrant shall take place at the offices of Littman Krooks LLP, 655 Third Avenue, New York NY 10417 (or remotely via the exchange of documents and signatures) on the date of this Agreement (the "Closing Date"). At the Closing: (a) the Company shall deliver to the Purchaser a Certificate of the Secretary of the Company attesting as to resolutions of the Board of Directors of the Company, authorizing and approving all matters in connection with this Agreement and the transactions contemplated hereby; (b) the Company shall deliver to the Purchaser, the Note in the principal amount of $250,000 and the Warrant exercisable for 37,500,000 shares of Common Stock; (c) the Purchaser shall pay directly to the Company, by wire transfer of immediately available funds, the Purchase Price for the Note and Warrant being purchased by the Purchaser hereunder; (d) the Company shall execute and deliver that certain Security Agreement in the form attached as EXHIBIT C hereto (the "Security Agreement") entered into by the Company in favor of Hudson Asset Partners, LLC, as agent for the Purchaser; and (e) The Company shall execute and deliver that certain Intercreditor Agreement in the form attached as EXHIBIT D hereto (the "Intercreditor Agreement") by and among the Company, Cheshire Associates, LLC and Cornell Capital Partners, L.P. in favor of Hudson Asset Partners, LLC, as agent for the Purchaser. 2.4 THE SECOND CLOSING. Subject to the terms and conditions of this Agreement, the closing (the "Second Closing"} of the sale and purchase of the Second Note and the Second Warrant shall take place at the offices of Littman Krooks LLP, 655 Third Avenue, New York NY 10017 (or remotely via the exchange of documents and signatures) on the date, after the slate of the Company Notice provided for in Section 1.3 of this Agreement, that is mutually agreed upon between the Company and the Purchaser (the "Second Closing Date"). At the Second Closing: (a) the Company shall deliver to the Purchaser, the Second Note in the principal amount of $250,000 and the Second Warrant exercisable for 37,500,000 shares of Common Stock; 2 (b) the Purchaser shall pay directly to the Company, by wire transfer of immediately available funds, the Second Purchase Price for the Second Note and the Second Warrant being purchased by the Purchaser hereunder; (c) The Company shall deliver a certificate executed by its Chief Executive Officer certifying that each of the representations and warranties of the Company contained in this Agreement shall be true and correct and all covenants shall have been complied with by the Company, in all material respects, when made on the date hereof and on and as of the Second Closing Date as though made on and as of the Second Closing Date; and (d) The Purchaser shall execute and deliver to the Company a certificate certifying that each of the representations, warranties and covenants of the Purchaser contained in this Agreement shall be true and correct, in all material respects, when made on the date hereof and on and as of the Second Closing Date as though made on and as of the Second Closing Date. 3. REPRESENTATIONS OF THE COMPANY. The Company hereby represents and warrants to the Purchaser as follows: 3.1 ORGANIZATION AND STANDING. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has requisite corporate power and authority to conduct its business as presently conducted and as proposed to be conducted by it and to enter into and perform this Agreement, as well as the Note, Warrant, Second Note, Second Warrant the Security Agreement and the Intercreditor Agreement (collectively, the "Ancillary Agreements") and to carry out the transactions contemplated by this Agreement and the Ancillary Agreements. The Company is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the failure so to qualify would have a material adverse effect on the business, assets or liabilities or condition (financial or otherwise) of the Company or its business (a "Company Material Adverse Effect"). The Company has furnished, to the extent requested by any Purchaser in writing, complete and accurate copies of its certificate of incorporation (the "Articles") and By-laws, each as amended to date and presently in effect. 3.2 SUBSIDIARIES, ETC. The Company has no subsidiaries and does not own or control, directly or indirectly, any shares of capital stock of any other corporation or any interest in any partnership, limited liability company, joint venture or other non-corporate business enterprise. 3.3 CAPITALIZATION. --------------- (a) The capitalization of the Company as of the date of this Agreement, including its authorized capital stock, the number of shares issued and outstanding, the number of shares issuable and reserved for issuance pursuant to the Company's stock option plans and agreements, the number of shares issuable and reserved for issuance pursuant to securities (other than the Note and Warrant) exercisable for, or convertible into or exchangeable for any shares of Common Stock and the number of shares initially to be reserved for issuance upon conversion of the Note and exercise of the Warrant, is set forth in the SEC Documents (as defined below) or has otherwise been made known to the 3 Purchaser. All issued and outstanding shares of capital stock of the Company have been validly issued, fully paid and non-assessable. (b) Except as set forth in the SEC Documents or has otherwise been made known to the Purchaser, (i) no subscription, warrant, option, convertible security or other right (contingent or otherwise) to purchase or acquire any shares of capital stock of the Company is authorized or outstanding, (ii) the Company has no obligation (contingent or otherwise) to issue any subscription, warrant, option, convertible security or other such right, or to issue or distribute to holders of any shares of its capital stock any evidences of indebtedness or assets of the Company, (iii) the Company has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any shares of its capital stock or any interest therein or to pay any dividend or to make any other distribution in respect thereof, and (iv) there are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to the Company. (c) Except for the Ancillary Agreements and as disclosed in the SEC Documents, there is no agreement, written or oral, between the Company and any holders of its securities, or, to the best of the Company's knowledge, among any holder of its securities, relating to the sale or transfer (including without limitation agreements relating to rights of first refusal, co-sale rights or "drag - along" rights), registration under the Securities Act of 1933, as amended (the "Securities Act'), or voting, of the capital stock of the Company. 3.4 ISSUANCE OF NOTE AND WARRANT. The issuance, sale and delivery of the Note, Warrant, Second Note and Second Warrant in accordance with this Agreement, and the issuance and delivery of the shares of Common Stock issuable upon (i) conversion of the Note and Second Note (the "Note Shares") and (ii) exercise of the Warrant and Second Warrant (the "Warrant Shares," and together with the Note Shares, the "Securities"), have been duly authorized by all necessary corporate action on the part of the Company, and all such shares have been, or will be prior to the Closing; or Second Closing, as applicable, duly reserved for issuance. The Securities when so issued, sold and delivered against payment therefor in accordance with the provisions of this Agreement, when issued upon such conversion, will be duly and validly issued, fully paid and nonassessable. This Section 3.4, and all other provisions of Article 3 of this Agreement, are expressly subject to the fact that due to a shortage of authorized but unissued shares of Common Stock, the Securities are not yet authorized and the Note, Second Note, Warrant and Second Warrant cannot be converted or exercised unless and until the Company amends the Articles to increase its authorized number of shares of Common Stock. 3.5 CORPORATE POWER; AUTHORITY FOR AGREEMENT; NO CONFLICT. The Company will have, at the Closing, all requisite corporate power to execute and deliver this Agreement and the Ancillary Agreements, to sell and issue the Note and Warrant hereunder, to issue the Securities, to consummate the other transactions contemplated by the terms of this Agreement and carry out and perform its obligations under the terms of this Agreement. The execution, delivery and performance by the Company of this Agreement and the Ancillary Agreements, and the consummation by the Company of the transactions contemplated hereby and thereby, have been duly authorized by all necessary corporate action. This Agreement has been, and the Ancillary Agreements when executed at the Closing will be, duly executed and delivered by the Company and constitute valid and binding obligations of the Company enforceable in accordance with their 4 respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting generally the enforcement of creditors' rights and subject to a court's discretionary authority with respect to the granting of a decree ordering specific performance or other equitable remedies. The execution and delivery of this Agreement and the Ancillary Agreements, the consummation of the transactions contemplated hereby and thereby and the compliance with their respective provisions by the Company will not (a) conflict with or violate any provision of the Articles or By-laws of the Company, (b) require on the part of the Company any filing with, or any permit, order, authorization, consent or approval of, any court, arbitrational tribunal, administrative agency or commission or other governmental or regulatory authority or agency (each of the foregoing is hereafter referred to as a "Governmental Entity"), (c) conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party the right to accelerate, terminate, modify or cancel, or require any notice, consent or waiver under, any contract, lease, sublease, license, sublicense, franchise, permit, indenture, agreement or mortgage for borrowed money, instrument of indebtedness, Security Interest (as defined below) or other arrangement to which the Company is a party or by which the Company is bound or to which its assets are subject, other than any of the foregoing events listed in this clause (c) that do not and will not, individually or in the aggregate, have a Company Material Adverse Effect, or (d) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Company or any of its properties or assets. For purposes of this Agreement, "Security Interest" means any mortgage, pledge, security interest, encumbrance, charge, or other lien (whether arising by contract or by operation of law). 3.6 GOVERNMENTAL CONSENTS. No consent, approval, order or authorization of, qualification, declaration or filing with, any Governmental Entity is required on the part of the Company in connection with the offer, issuance, sale and delivery of the Note and Warrant, the issuance and delivery of the Securities or the other transactions to be consummated at the Closing, as contemplated by this Agreement and the Ancillary Agreements, except such filings as shall have been made prior to and shall be effective on and as of the Closing and such filings required to be made after the Closing under applicable federal and state securities laws. Based on the representations made by the Purchaser in Section 4 of this Agreement, the offer and sale of the Note and Warrant to the purchaser will be in compliance with applicable Federal and state securities laws. 3.7 LITIGATION. Except as set forth in the SEC Documents, there is no claim, action, suit or proceeding, or governmental inquiry or investigation, pending, or, to the Company's knowledge, any threat thereof, against the Company, before any court, agency or tribunal which questions the validity of this Agreement, the Ancillary Agreements or the right of the Company to enter into any such agreements, or which could reasonably be expected to result in a Company Material Adverse Effect; there is no litigation pending or to the Company's knowledge, any threat thereof, against the Company or any of its employees by reason of the past employment relationships of any of the Company's employees, their use in connection with the Company's business of any proprietary information or techniques or their obligations under any agreements with former employers, the proposed activities of the Company, or negotiations by the Company with possible investors in the Company; and the Company is not subject to any outstanding judgment, order or decree. 5 3.8 FINANCIAL STATEMENTS. The Company has filed with the Securities and Exchange Commission ("Commission") all periodic reports, schedules, registration statements and definitive proxy and information statements that the Company was required to file with Commission on or after December 31, 2004 (collectively, the "SEC Documents"). The Company is not aware of any event occurring on or before the date of this Agreement (other than the transactions effected hereby) that would require the filing of, or with respect to which the Company intends to file, a Form 8-K after the date of this Agreement, except as has otherwise been made known to the Purchaser. Each SEC Document, as of the date of the filing thereof with the Commission (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such amending or superseding filing), complied in all material respects with the requirements of the Securities Act or Securities Exchange Act of 1934, as amended ("Exchange Act"), as applicable, and the rules and regulations promulgated thereunder and, as of the date of such filing (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing), such SEC Document (including all exhibits and schedules thereto and documents incorporated by reference therein) did not contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. All documents that are required to be filed as exhibits to the SEC Documents have been filed as required. The Company has no liabilities, contingent or otherwise, other than liabilities incurred in the ordinary course of business, liabilities in connection with the transactions contemplated by this Agreement and liabilities that, under GAAP, are not required to be reflected in the financial statements included in the SEC Documents. As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission with respect thereto. The financial statements included in the SEC Documents have been and will be prepared in accordance with GAAP consistently applied at the times and during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements, or (iii) as set forth in the SEC Documents), and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, is the case of unaudited statements, to normal year-end adjustments). 3.9 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in the SEC Documents, the Company does not have any known liability (whether absolute or contingent), except for (a) liabilities shown on the balance sheet as of December 31, 2005 (the "Balance Sheet Date"), (b) liabilities that have arisen since the Balance Sheet Date in the ordinary course of business and which are similar in nature and amount to the liabilities that arose during the comparable period of time in the immediately preceding fiscal period, (c) contractual and other liabilities incurred in the ordinary course of business that are not required by generally accepted accounting principles and practices consistently applied in the United States to be reflected on a balance sheet and that would not, either individually or in the aggregate, have or result in a Company Material Adverse Effect and (d) liabilities incurred in connection with the transactions contemplated hereunder. 3.10 INTELLECTUAL PROPERTY. Except as set forth in the SEC Documents or which would not reasonably be expected to result in a Company Material 6 Adverse Effect, there is no pending nor, to the Company's knowledge, threatened claim, suit or action, nor have there been any written communications, contesting or challenging the rights of the Company in or to any item of intellectual property owned or used by Company in the conduct of its business (the "Intellectual Property") or the validity of any of the Intellectual Property. To the Company's knowledge, there is no infringement upon or authorized use of any of the Intellectual Property by any third party or which would not reasonably be expected to result in a Company Material Adverse Effect. No officer, director, equity holder or affiliate of the Company's nor any of their respective associates has any right to or interest in any of the Intellectual Property, including, without limitation, any right to payments (by royalty or otherwise) in respect of any use or transfer thereof. 3.11 COMPLIANCE. The Company has, in all material respects, complied with all laws, regulations and orders applicable to its business and has all material permits and licenses required thereby. There is no term or provision of any mortgage, indenture, contract, agreement or instrument to which the Company is a party or by which it is bound, or, to the Company's knowledge, of any provision of any state or Federal judgment, decree, order, statute, rule or regulation applicable to or binding upon the Company, which materially adversely affects or, so far as the Company may now reasonably foresee, in the future is reasonably likely to result in or have a Company Material Adverse Effect. 3.12 FOREIGN ASSETS CONTROL LEGISLATION. Neither the sale of the Note and the Warrant by the Company hereunder nor its use of the proceeds thereof will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto. Without limiting the foregoing, neither the Company nor any of its subsidiaries (a) is a person whose property or interests in property are blocked pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) or (b) engages in any dealings or transactions, or be otherwise associated, with any such person. The Company is in compliance with the USA Patriot Act of 2001 (signed into law October 26, 2001). 3.13 PERMITS. The Company has all material franchises, permits, licenses, and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could materially and adversely affect the business, properties, prospects, or financial condition of the Company and believes it can obtain, without undue burden or expense, any similar authority for the conduct of its business as planned to be conducted. The Company is not in default in any material respect under any of such franchises, permits, licenses, or other similar authority. 3.14 Broker's Finder's or Similar Fees. There are no brokerage commissions, finder's fees or similar fees or commissions payable by the Company in connection with the transactions contemplated hereby based on any agreement, arrangement or understanding with the Company or any action taken by any entity or individual on behalf of the Company. 4. REPRESENTATIONS OF THE PURCHASER. The Purchaser represents and warrants to the Company as follows; 7 4.1 EXISTENCE AND POWER. The Purchaser (a) is a duly organized legal entity, validly existing and in good standing under the laws of the state of its organization, and has the requisite power and authority to own, lease and operate its assets and properties and to carry on its business as presently conducted and (b) has the requisite power and authority to execute, deliver and perform its obligations under this Agreement and each Ancillary Agreement to which the Purchaser is a party. 4.2 AUTHORIZATION, NO CONTRAVENTION. The execution delivery and performance by the Purchaser of this Agreement and each of the Ancillary Agreements to which the Purchaser is a party and the transactions contemplated hereby and thereby, (a) have been duly authorized by all necessary action, (b) do not contravene the terms of such Purchaser's organizational documents, or any amendment thereof and (c) do not violate, conflict with or result in any breach or contravention of, or the creation of any lien under, any material contractual obligation of the Purchaser or any requirement of law applicable to the Purchaser. 4.3 GOVERNMENTAL AUTHORIZATION, THIRD PARTY CONSENTS. No approval, consent, compliance, exemption, authorization or other action by, or notice to, or filing with, any Governmental Entity or any other person, and no lapse of a waiting period under any requirement of law, is necessary or required in connection with the execution, delivery or performance (including, without limitation, the purchase of the Note and Warrant) by, or enforcement against, the Purchaser of this Agreement and each of the Ancillary Agreements to which it is a party or the transactions contemplated hereby and thereby. 4.4 BINDING EFFECT. This Agreement and the related documents to which the Purchaser is a party have been duly executed and delivered by the Purchaser and constitute the legal, valid and binding obligations of the Purchaser, enforceable against the Purchaser in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting generally the enforcement of creditors' rights and subject to a court's discretionary authority with respect to granting a decree ordering specific performance or other equitable remedies. 4.5 PURCHASE FOR OWN ACCOUNT. The Note, Warrant and Securities hereby acquired by the Purchaser pursuant to this Agreement, and any capital stock issuable upon conversion or exercise thereof, are being, and any corresponding securities issued at the Second Closing or underlying such securities would be, acquired for the Purchaser's own account for investment and not with a view to the resale or distribution of any part thereof, and the Purchaser has no present intention of selling, granting any participation in, or otherwise distributing (as such term is defined in the Securities Act) the same. If the Purchaser should in the future decide to dispose of any of the Note, Warrant or Securities, or any capital stock issuable upon conversion or exercise thereof, the Purchaser understands and agrees that it may do so only in compliance with the Securities Act and applicable state securities laws, as then in effect. Each Purchaser agrees to the imprinting, so long as required by law, of legends on certificates representing any of its Note, the Warrant and Securities: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY 8 STATE. THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THE TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. 4.6 RESTRICTED SECURITIES. The Purchaser understands the Note, Warrant and Securities will not be registered at the time of their issuance under the Securities Act since the Note, Warrant and Securities are being acquired from the Company in a transaction exempt from the registration requirements of the Securities Act, which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser's representations as expressed herein. 4.7 INVESTMENT REPRESENTATIONS. --------------------------- (a) The Purchaser acknowledges that the offer and sale of the Note, Warrant and Securities were not accomplished by the publication of any advertisement. (b) The Purchaser is an "accredited investor" as that term is defined in Regulation D under the Securities Act. (c) The Purchaser acknowledges that (i) an investment in the Note, Warrant and Securities is highly speculative, and that the Purchaser may suffer the loss of all or part of its investment and that (ii) the Company, its officers, directors, members and their successors and assigns make no representation or warranty hereunder or otherwise regarding the fair market value or future value of the Securities; (d) The Purchaser has examined the Note, Warrant and Securities sold pursuant to this Agreement and is familiar with and understands the terms of this Agreement; (e) In making the decision to purchase the Note, Warrant and Securities the Purchaser has relied solely on independent investigation made by the Purchaser. The Purchaser confirms that the Purchaser has had the opportunity to ask questions of, and receive answers from, the Company concerning the sale of the Note, Warrant and Securities, the financial condition, outlook and business operations of the Company and has otherwise had an opportunity to obtain any additional information, to the extent that the Company possess such information or could acquire it without unreasonable effort or expense; (f) The Purchaser's overall commitment to investments which are not readily marketable is not disproportionate to the Purchaser's purchase of the Note, Warrant and Securities, will not cause such overall commitment to become excessive and the Purchaser can afford to bear the loss of the Purchase Price paid for the securities sold pursuant to this Agreement; 9 (g) The Purchaser satisfied any special suitability or other applicable requirements of the Purchaser's current needs and personal contingencies and has no need for liquidity in its investment in the Note, Warrant and Securities; and (h) The Purchaser acknowledges that this transaction has not been reviewed or scrutinized by the Securities and Exchange Commission or by any administrative agency charged with the administration of the securities laws of any state, and that no such agency has passed on or made any recommendation or endorsement of the shares constituting the Securities. 4.8 EXPERIENCE. The Purchaser has carefully reviewed the representations concerning the Company contained in this Agreement and has made detailed inquiry concerning the Company, its business and its personnel; the officers of the Company have made available to the Purchaser any and all written information which it has requested and have answered to such Purchaser's satisfaction all inquiries made by the Purchaser; and the Purchaser has sufficient knowledge and experience in finance and business that it is capable of evaluating the risks and merits of its investment in the Company and the Purchaser is able financially to bear the risks thereof. 4.9 BROKER'S FINDER'S OR SIMILAR FEES. There are no brokerage commissions, finder's fees or similar fees or commissions payable by the Purchaser in connection with the transactions contemplated hereby based on any agreement, arrangement or understanding with the Company or any action taken by any entity or individual. 5. INDEMNIFICATION. ---------------- (a) The Company agrees to indemnify and hold harmless the Purchaser and its general partners, employees, officers, directors, members, agents and other representatives (collectively, the "Purchaser Indemnitees"), against any expenses, damages, liabilities or losses (joint or several) arising out of such investigations, proceedings, claims or actions, to which the Purchaser Indemnitees may become subject, whether under the Act or any rules or regulations promulgated thereunder, the Exchange Act or any rules or regulations promulgated thereunder, or any other federal or state law or regulation, or common law, arising or out of or based upon any breach of any representation, warranty, agreement, obligation or covenant of the Company contained herein. The Company also agrees to reimburse the Purchaser Indemnitees for any legal or other expenses reasonably incurred in connection with investigating or defending any such investigations, proceedings, claims or actions, as such expenses or other costs are incurred. The Indemnitees may select their own counsel; and (b) The Purchaser agrees to indemnify and hold harmless the Company and any of the Company's employees, officers, directors, members, agents and other representatives (collectively, the "Company Indemnitees"), against any expenses, damages, liabilities or losses (joint or several) arising out of such investigations, proceedings, claims or actions, to which the Company Indemnitees may become subject, whether under the Act or any rules or regulations promulgated thereunder, or any other federal or state law or regulation, or common law, arising or out of or based upon any breach of any representation, warranty, agreement, obligation or covenant of the Purchaser contained herein. 10 The Purchaser also agrees to reimburse the Company Indemnitees for any legal or other expenses reasonably incurred in connection with investigating or defending any such investigations, proceedings, claims or actions, as such expenses or other costs are incurred. The Company Indemnitees may select their own counsel. 6. FURTHER AGREEMENT. The parties hereto acknowledge and agree that the Purchaser shall become a party to, and the Securities shall be considered Registrable Securities under, the Registration Rights Agreement to be entered into by the Company in connection with in its next offering of up to an aggregate principal amount of $5,000,000 senior secured, convertible promissory notes (the "Bridge Notes") consummated by the Company after the date hereof and pursuant to a confidential private placement memorandum. 7. MISCELLANEOUS. -------------- 7.1 SUCCESSORS AND ASSIGNS. Subject to securities laws restrictions of general applicability, this Agreement, and the rights and obligations of the Purchaser hereunder, may be assigned by the Purchaser to (a) any person or entity to which the Note and/or Warrant are transferred by such Purchaser, or (b) to any Affiliated Party (as hereinafter defined), and, in each case, such transferee shall be deemed a "Purchaser" for purposes of this Agreement; PROVIDED that such assignment of rights shall be contingent upon the transferee providing a written instrument to the Company notifying the Company of such transfer and assignment and agreeing in writing to be bound by the terms of this Agreement. Without prior written consent of the Agent, the Company may not assign its rights under this Agreement for twelve (12) months from the date hereof. For purposes of this Agreement, "Affiliated Party" shall mean, with respect to the Purchaser, any person or entity which, directly or indirectly, controls, is controlled by or is under common control with such Purchaser, including, without limitation, any general partner, officer or director of the Purchaser and any venture capital fund now or hereafter existing which is controlled by one or more general partners of, or shares the same management company as, the Purchaser. 7.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the representations and warranties made herein shall survive for twelve (12) months following the Closing or the Second Closing, as the case may be. The Purchaser is entitled to rely, and the parties hereby acknowledge that the Purchaser has so relied, upon the truth, accuracy and completeness of each of the representations and warranties of the Company contained herein, irrespective of any independent investigation made by the Purchaser. The Company is entitled to rely, and the parties hereby acknowledge that the Company has so relied, upon the truth, accuracy and completeness of each of the representations and warranties of the Purchaser contained herein, irrespective of any independent investigation made by the Company. 7.3 EXPENSES. Each party hereto shall pay its own expenses relating to the transactions contemplated by this Agreement, including, without limitation, the fees and expenses of their respective counsel, financial advisors and accountants. 7.4 SEVERABILITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. 11 7.5 SPECIFIC PERFORMANCE. In addition to any and all other remedies that may be available at law in the event of any breach of this Agreement, the Purchaser shall be entitled to specific performance of the agreements and obligations of the Company hereunder and to such other injunctive or other equitable relief as may be granted by a court of competent jurisdiction. 7.6 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York. The Company and the Purchaser hereby irrevocably consent to the jurisdiction of the Courts of the State of New York and of any Federal Court located in the county of New York, State of New York in connection with any action or proceeding arising out of or relating to this Agreement. In any such litigation the Company waives personal service of any summons, complaint or other process and agrees that the service thereof may be made by certified or registered mail directed to the Chief Executive Officer of the Company at its address set forth below. 7.7 NOTICES. All notices, requests, consents, and other communications under this Agreement shall be in writing and shall be deemed delivered (i) three business days after being sent by registered or certified mail, return receipt requested, postage prepaid or (ii) one business day after being sent via a reputable nationwide overnight courier service guaranteeing next business day delivery, in each case to the intended recipient as set forth below; If to the Company, to The Immune Response Corporation, 5931 Darwin Court, Carlsbad, California 92008, Attention: Joseph F. O'Neill, CEO and President, telefax number (760) 431-8636, or at such other address as may have been furnished in writing by the Company to the other parties hereto, with a copy to Heller Ehrman LLP, 4350 La Jolla Village Drive, 7th Floor, San Diego, California 92122, Attention: Hayden J. Trubitt, Esq., telefax number (858) 587-5903; or If to the Purchaser, to Qubit Holdings, LLC, _________________, Attention: Alan Fogelman, Non-Member Manager, telefax number (___) ____________, or at such other address as may have been furnished in writing by the Purchaser to the other parties hereto, with a copy to Littman Krooks LLP, 655 Third Avenue, New York, New York 10017, Attention: Mitchell C. Littman, Esq., telefax number (212) 490-2990. Any party may give any notice, request, consent or other communication under this Agreement using any other means (including, without limitation, personal delivery, messenger service, telecopy, first class mail or electronic mail), but no such notice, request, consent or other communication shall be deemed to have been duly given unless and until it is actually received by the party for whom it is intended. Any party may change the address to which notices, requests, consents or other communications hereunder are to be delivered by giving the other parties notice in the manner set forth in this Section. 7.8 COMPLETE AGREEMENT. This Agreement (including its exhibits) constitutes the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings relating to such subject matter and except as specifically set forth herein or therein, no party makes any representation, warranty, covenant or undertaking with respect to any such matters. 12 7.9 AMENDMENTS AND WAIVERS. This Agreement may be amended or terminated and the observance of any term of this Agreement may be waived with respect to all parties to this Agreement (either generally or in a particular instance and either retroactively or prospectively), with the written consent of the Company and the Purchaser. No waivers of or exceptions to any term, condition or provision of this Agreement, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision. 7.10 PRONOUNS. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural, and vice versa. 7.11 COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, and all of which shall constitute one and the same document. This Agreement may be executed by facsimile signatures. 7.12 SECTION HEADINGS AND REFERENCES. The section headings are for the convenience of the parties and in no way alter, modify, amend, limit or restrict the contractual obligations of the parties. Any reference in this agreement to a particular section or subsection shall refer to a section or subsection of this Agreement, unless specified otherwise. 8. AGENT APPOINTMENT. ------------------ 8.1 The Purchaser hereby authorizes Hudson Asset Partners, LLC, a Delaware limited liability company ("Hudson"), to act as collateral agent (the "Agent") on behalf of the Purchaser, and in such capacity to enter into the Security Agreement, the Intercreditor Agreement, and to exercise for the benefit of the Purchaser all rights, powers and remedies provided to it, under or pursuant to the Security Agreement and the Intercreditor Agreement, including, without limitation, those available upon an Event of Default (as defined in the Note), subject always to the terms, conditions, limitations and restrictions provided in the Note, the Warrant, the Security Agreement and the Intercreditor Agreement. Except with respect to actions as to which the Agent is expressly required to act under the terns of the Security Agreement and/or, the Intercreditor Agreement, the Purchaser hereby agrees that the Agent may act or refrain from acting thereunder with the consent, in writing of holders of a majority of the aggregate principal amount of Bridge Notes and the Note outstanding as of the date of such consent ("Requisite Holders"), and that the Requisite Holders shall have the right to direct the time, method and place of conducting any proceeding for any right or remedy available to the Agent; provided, however, that such direction shall not be in conflict with any rule of law or expose the Agent to personal liability, such direction shall not be unduly prejudicial to the rights of any non-consenting holder, and the Agent may take any action deemed proper by the Agent, in its discretion, that is not inconsistent with such direction or the terms of the Security Agreement and/or the Intercreditor Agreement. The Purchaser agrees that the duties of the Agent are only such as are specifically provided in the Security Agreement and/or the Intercreditor Agreement, and the Agent shall have no other duties, implied or otherwise. The appointment of Hudson as Agent shall be deemed accepted by Hudson, and it shall be and become obligated to the extent provided in the Security Agreement and the Intercreditor Agreement, only upon the execution and delivery of the Security Agreement and the Intercreditor Agreement by Hudson and 13 the other parties to the Security Agreement and the Intercreditor Agreement, respectively. 8.2 The Purchaser agrees that the Agent may consult with counsel of its choice and shall not be responsible or liable for any action taken, suffered or omitted to be taken by it in good faith in accordance with the advice of such counsel (subject to the exceptions set forth in the next two sentences). The Purchaser further agrees that the Agent shall not incur liability for any action or omission to act by it unless the Agent's conduct constitutes willful misconduct or gross negligence. During the continuance of an Event of Default, the Agent shall be required to use the same degree of care and skill in its exercise of its powers and performance of its duties as a prudent person would exercise under the circumstances in the conduct of such person's own affairs. 8.3 None of the provisions of this Agreement, the Security Agreement or the Intercreditor Agreement shall be construed to require the Agent to expend or risk its own funds or otherwise to incur any liability (financial or otherwise) in the performance of any of its duties hereunder or thereunder, or in the exercise of any of its rights or powers unless it shall be satisfied that one or both of the Company and/or the Purchaser are at the time obligated and in a financial position to pay the Agent's reasonably anticipated fees for its services and its out-of pocket expenses (including fees of its counsel) in the performance of such duties or the exercise of any of such rights or powers and to indemnify it against such risk or liability. In no event shall the Agent be liable for (i) any consequential, punitive or special damages or (ii) the acts or omissions of its nominees, correspondents, designees, subagents or subcustodians. The Agent shall not incur any liability for not performing any act or fulfilling any duty, obligation or responsibility hereunder or thereunder by reason of any occurrence beyond the control of the Agent (including, but not limited to, any act or provision of any present or future law or regulation or governmental authority, any act of God or war, or the unavailability of the Federal Reserve Bank wire or telex or other wire or communication facility). 8.4 The Purchaser agrees that the Agent shall not be required or bound to make any investigation into the facts or matters stated in any resolution certificate, statement, instrument, opinion, report, notice, request, consent, entitlement order, approval or other paper or document. The Agent may execute any of the powers under this Agreement, the Security Agreement or the Intercreditor Agreement or perform any duties hereunder or thereunder either directly or by or through agents, attorneys, custodians or nominees appointed with due care, and shall not be responsible or liable for the acts or omissions, including any willful misconduct or gross negligence, on the part of any agent, attorney, custodian or nominee so appointed. 8.5 The Company covenants and agrees for the benefit of the Purchaser, and as an additional obligation secured under the Security Agreement, to be responsible to pay to the Agent from time to time, and the Agent shall be entitled to, fees and expenses as provided in the Security Agreement. 8.6 The Company agrees, for the benefit of the Purchaser, and as an additional obligation secured under the Security Agreement, to indemnify and hold the Agent and its directors, employees, officers, agents, successors and assigns harmless from and against any and all losses, claims, damages, 14 liabilities and expenses, including, without limitation, reasonable costs of investigation and reasonable counsel fees and expenses that may be imposed on the Agent or incurred by it in connection with its acceptance of its appointment as the Agent hereunder or under the Security Agreement or the Intercreditor Agreement or the performance of its duties thereunder, except as a result of the Agent' s gross negligence or willful misconduct. Such indemnity includes, without limitation, all losses, damages, liabilities and expenses (including reasonable counsel fees and expenses) incurred in connection with any litigation (whether at the trial or appellate levels) arising from this Agreement, the Security Agreement or the Intercreditor Agreement or involving the subject matter hereof or thereof. 8.7 The Purchaser agrees that Hudson or any successor may at any time resign as Agent by giving written notice thereof to the Company at least 20 business days prior to the date of such proposed resignation. Upon receiving such notice of resignation, the Company shall promptly appoint a successor collateral agent by written instrument executed by authority of its manager a copy of which shall be delivered to the resigning Agent and a copy to the successor collateral agent. If an instrument of acceptance by a successor collateral agent shall not have been delivered to the Agent within 20 business days after giving such notice of resignation, the resigning Agent may petition any court of competent jurisdiction for the appointment of a successor collateral agent. Such court may thereupon, after such notice, if any, as it may deem proper, appoint a successor collateral agent. The Agent may be removed at any time by written action by Requisite Holders, delivered to the Agent and to the Company. If the Agent shall be so removed, the Company shall promptly appoint a successor collateral agent in accordance with the procedures set forth in this Section 8.7. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 15 IN WITNESS WHEREOF, Executed as of the date first written above. COMPANY: THE IMMUNE RESPONSE CORPORATION By: /s/ Joseph F. O'Neill ----------------------------------- Name: Joseph F. O'Neill Title: Chief Executive Officer and President PURCHASER: QUBIT HOLDINGS, LLC By: /s/ Alan Fogelman ----------------------------------- Name: Alan Fogelman Title: Non-Member Manager [Signature Page to Securities Agreement] EX-99 4 irc13d_ex99-3.txt EXHIBIT 99.3 Exhibit 99.3 THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF (THE "CONVERSION SHARES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THESE SECURITIES MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT COVERING THIS NOTE OR CONVERSION SHARES OR (II) AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT WHERE THE HOLDER HAS FURNISHED TO THE COMPANY AN OPINION OF ITS COUNSEL THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE. THE IMMUNE RESPONSE CORPORATION 8% SENIOR SECURED CONVERTIBLE PROMISSORY NOTE $ 250,000 February 9, 2006 (Principal Amount) THE IMMUNE RESPONSE CORPORATION, a Delaware corporation (the "COMPANY"), for value received, hereby promises to pay to the order of Qubit Holdings, LLC (the "HOLDER"), on January 1, 2008 (the "MATURITY DATE"), the principal sum of Two Hundred Fifty Thousand Dollars (US $250,000), together with interest at the rate of Eight Percent (8%) per annum (calculated daily on the basis of a 360-day year and actual calendar days elapsed) from the date hereof until the entire principal and accrued interest thereon shall become paid or otherwise satisfied, subject to earlier conversion as set forth below. The obligations of the Company under this Note are secured by the grant of a security interest in all of the assets of the Company pursuant to the terms of a certain Security Agreement dated as of February 9, 2006 (the "SECURITY AGREEMENT"), by the Company in favor of Hudson Asset Partners, LLC, a Delaware limited liability company (the "AGENT"), as agent of the initial Holder of this Note and the holders of Bridge Notes (as defined below). Such security interest shall rank PARI PASSU with the security interests in the Company's assets granted by the Company in favor of Cheshire Associates LLC ("CHESHIRE"), in connection with its certain mortgage note issued by the Company in April 2005 in the original principal amount of $5,740,928 (the "CHESHIRE NOTE"), Cornell Capital Partners, L.P. ("CORNELL" and, collectively with Cheshire, the "EXISTING SECURED PARTIES"), in connection with its certain debenture issued by the Company in August 2005 in the original principal amount of $1,000,000 (the "CORNELL DEBENTURE" and certain senior secured promissory notes up to an aggregate principal amount of $5,000,000 to be offered by the Company (the "OFFERING"), after the date hereof, in a private placement of such notes (the "BRIDGE NOTES") pursuant to the terms of an Intercreditor Agreement dated as of February 9, 2006 (the "INTERCREDITOR AGREEMENT") by and among the Company and the Existing Secured Parties in favor of the Agent, as agent of the initial Holder of this Note and the holders of Bridge Notes, who shall become a party to the Intercreditor Agreement upon the first closing of the Offering. All payments shall be made in lawful money of the United States of America at such place as the Holder hereof may from time to time designate in writing to the Company, and, in absence of any designation, shall be paid to the Holder at its address set forth in the Holder's Subscription Agreement and shall be credited first to the accrued interest then due and payable and the remainder applied to principal. If any payment hereunder falls due on a Saturday, Sunday or legal holiday, it shall be payable on the next succeeding business day and such additional time shall be included in the computation of interest. 1. INTEREST. Interest shall accrue on the principal amount from the date of issuance and be paid on the Maturity Date, subject to earlier conversion as set forth herein. 2. CONVERSION. 2.1 OPTIONAL CONVERSION. The Holder may convert the entire unpaid principal amount of this Note and any accrued interest thereon into Common Stock at any time in whole or from time to time in part commencing on the date on which the Company files with the Secretary of State of the State of Delaware an amendment to its certificate of incorporation increasing its authorized shares of Common Stock to an amount sufficient to allow for conversion of this Note and terminating at 5:00 PM, New York Time, on the Maturity Date (the "CONVERSION PERIOD"). 2.2 MANDATORY CONVERSION. The entire unpaid principal amount of this Note and any accrued interest thereon shall be convertible, at the option of the Company ("Company Mandated Conversion"), into Common Stock at anytime on or after (i) the later of (x) the date that is six months after the date hereof or (y) the date on which a registration statement filed with the Securities and Exchange Commission (the "SEC") registering (either for initial issuance or for resale) the shares of Common Stock underlying this Note shall have been declared effective by the SEC and (ii) a Certificate of Amendment to the Company's Certificate of Incorporation has been filed with the Delaware Secretary of State, increasing the authorized number of shares of Common Stock to a number sufficient to permit the reservation of all shares of Common Stock into which all the Notes are convertible; PROVIDED, HOWEVER, that such conversion shall only be permitted if (A) the closing price of the Common Stock on the principal exchange or market on which it is then traded has equaled or exceeded $0.10 per share for the 10 of 15 consecutive trading days immediately preceding the date of the proposed Company Mandatory Conversion and (ii) the trading volume of the Common Stock during such period has equaled or exceeded two (2%) percent of the public float for 10 of the same 15 consecutive trading days in which such closing price of the Common Stock equaled or exceeded $0.10 per share. If such election is made, the Company shall provide written notice of the Company Mandated Conversion to the Holder within five (5) business days of such determination ("COMPANY MANDATED CONVERSION NOTICE") by mailing, by first class mail, postage prepaid, a copy of such notice to the Holder. 2.3 CONVERSION PRICE. The conversion price (the "CONVERSION PRICE"} shall initially be Two Cents ($.02) per share of Common Stock. 2.4 METHOD OF CONVERSION. The Holder, at its option, may exercise its conversion right in whole or in part at any time during the Conversion Period by completing and executing the Notice of Conversion attached to this Note as ATTACHMENT I. The Notice of Conversion, together with this Note, must be received by the Company on or prior to the termination of the Conversion Period. To the extent that this Note is converted in part, the Company shall execute and deliver to the Holder a new note identical to this Note except that the principal amount of the new note shall be equal to the portion of the unpaid principal amount of this Note not converted. In lieu of issuing a fractional share upon conversion, the Holder will receive the next highest whole number of shares. 2 The Company shall, or instruct its transfer agent to, issue and deliver certificates for the shares of Common Stock issuable upon conversion within three (3) business days after receipt of the Notice of Conversion. Delivery by the Company of a Company Mandated Conversion Notice in the case of a Company Mandated Conversion, when all conditions have been satisfied, shall have the same effect as cancellation of the original Note. 2.5 ANTI-DILUTION. (a) CHANGE IN CAPITALIZATION. In case of any stock split (forward or reverse), stock dividend or similar transaction prior to the date of a conversion (the "CONVERSION DATE") which increases or decreases the number of outstanding shares of Common Stock, appropriate adjustment shall be made by the Board of Directors of the Company to the applicable Conversion Price. (b) RECLASSIFICATION. In case of any reclassification, capital reorganization or change of the outstanding Common Stock of the Company (other than as a result of a subdivision, combination or stock dividend covered by Section 23(a)), at any time prior to the Conversion Date, then, as a condition of such reclassification, reorganization or change, a lawful provision shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the Holder, so that the Holder shall have the right to receive upon conversion (instead of the original number and type of conversion securities, into which, in fact, this Note would then no longer be convertible) the kind and amount of shares of Common Stock and other securities (the "CONVERSION SHARES") and property receivable upon such reclassification, reorganization or change, and a change in the Conversion Price, if necessary, that a holder of Common Stock owning the number of shares of Common Stock which might have been purchased by the Holder immediately prior to such reclassification, reorganization or change would be entitled to. In any such case appropriate provisions shall be made in order to respect the rights and interests of the Holder under this Note. (c) CONSOLIDATION, MERGER AND SALE OF ASSETS. In the event of any consolidation of the company with or a merger of the Company into another corporation or in case of any sale or conveyance to another corporation of the property of the Company as an entirety or substantially as an entirety, whereby (i) the surviving entity is a publicly traded company, and (ii) the consideration to be received by the holders of the Common Stock includes publicly traded equity securities in the surviving entity or parent corporation, the Company agrees that a condition of such transaction will be that the successor or purchasing corporation, as the case may be, shall assume the obligations of the Company hereunder in writing. In the case of any such consolidation, merger or sale or conveyance, the Holder shall have the right, until the payment of the entire principal amount of the Notes and any accrued interest thereon (subject to the right of the Holder to convert), upon conversion at the applicable Conversion Price in effect immediately prior to such action, to receive (instead of the original number and type of conversion securities, into which, in fact, this Note would no longer be convertible) the kind and amount of shares and other securities and/or property which he would have owned or have been entitled to receive after the happening of such consolidation, merger, sale or conveyance had this Note been converted immediately prior to such action, subject to adjustments which shall be as nearly equivalent as maybe practicable to the adjustments provided for in this Section 2. The provisions of this Section 2.5(c) shall similarly apply to successive consolidations, mergers, sales or conveyances. 3 (d) NON-PUBLIC SUCCESSOR. In the event of any consolidation of the Company with or a merger of the Company into another corporation or in case of any sale or conveyance to another corporation of the property of the Company as an entirety or substantially as an entirety, whereby (i) the surviving entity is a non-publicly traded company, or (ii) the consideration to be received by the Common Stock holders does not include any publicly traded equity securities in the surviving entity or its parent corporation, the Company agrees that a condition of such transaction will be that the Company shall mail to the Holder at the earliest applicable time (and, in any event not less than ten (10) days before any record date for determining the persons entitled to receive the consideration payable in such transaction) written notice of such record date. Such notice shall also set forth facts as shall indicate the effect of such action (to the extent such effect maybe known at the date of such notice) on the applicable Conversion Price of and the kind and amount of Conversion Shares and other securities and property deliverable upon conversion of this Note. Upon the closing of the transaction referenced in the foregoing notice, the right of conversion of this Note, shall terminate. (e) EXCHANGES AND DISTRIBUTIONS WITH RESPECT TO COMMON STOCK. If the Company shall exchange for its Common Stock or distribute with respect to its Common Stock other securities issued by it, the Company shall give notice thereof to the Holder, and the Holder shall have the right thereafter to convert the Note for (instead of the original number and type of conversion securities, into which, in fact, this Note would no longer be convertible) the kind and amount of shares of stock and other securities retained or received by a holder of the number of shares of Common Stock into which the Note might have been converted immediately prior to such exchange or distribution, subject to adjustment as provided hereinabove. (f) OFFICER'S CERTIFICATE. Whenever the applicable Conversion Price or the number or type of Conversion Shares is adjusted, the Company shall promptly mail to the Holder a notice of adjustment. The notice of adjustment shall include a brief statement of the facts requiring the adjustment and the manner of computing it, and shall be certified by the chief financial officer of the Company. The determination of the adjustment shall be made by the Company in its sole discretion and shall be final and binding upon the Holder. 2.6 TAXES ON CONVERSION. If the Holder converts the Note as described hereunder, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon the conversion. However, the Holder shall pay any such tax which is due because the shares are issued in a name other than the Holder's name. 3. SENIORITY. 3.1 RANKING. The Holder's security interest in the collateral securing the indebtedness evidenced by this Note and the payment of the principal thereof shall be Senior (as hereinafter defined) to, and have priority in right of payment over, all other security interests in such collateral securing other indebtedness of the Company, now outstanding or hereinafter incurred, except the Bridge Notes, the Cheshire Note and the Cornell Debenture. Pursuant to the Intercreditor Agreement, the right to receive payment on this Note shall rank equally with the Bridge Notes, the Cheshire Note and the Cornell Debenture. "Senior," as used herein, shall be deemed to mean that, in the event of any default in the payment of the obligations represented by this Note (after giving effect to "cure" provisions, if any) or of any liquidation, insolvency, bankruptcy, reorganization, or similar proceedings relating to the Company, all sums payable on this Note, the Bridge Notes, the Cheshire Note and the Cornell 4 Debenture from such collateral will first be paid, with interest, if any, before any payment from such collateral is made upon any other indebtedness, now outstanding or hereinafter incurred, and, in any such event, any payment or distribution of any character from such collateral which shall be made in respect of any other indebtedness of the Company, shall be paid over to the Holder, the holders of the Bridge Notes, the holder of the Cheshire Note and the holder of the Cornell Debenture for application to the payment thereof on a PARI PASSU basis based on all amounts outstanding under this Note, the Bridge Notes, the Cheshire Note and the Cornell Debenture, unless and until the obligations under this Notes, the Bridge Notes, the Cheshire Note and the Cornell Debenture (which shall mean the principal and other obligations arising out of, premium, if any, interest on, and any costs and expenses payable under such notes and debenture) shall have been paid and satisfied in full. 3.2 RESTRICTION OF INDEBTEDNESS. The Company shall not incur or guaranty any indebtedness that would be senior, or grant any security interest that would be senior, to this Note, other than the Bridge Notes, the Cheshire Note and the Cornell Debenture. 3.3 PAYMENT OF JUNIOR INDEBTEDNESS. Until an Event of Default, nothing contained in this Note shall be deemed to preclude or prohibit the Company from making any required payment of principal or interest on any debt. 4. COVENANTS OF THE COMPANY. The Company agrees and covenants that, until such time as this Note has been paid in full, the Company will comply with the following covenants: 4.1 PAYMENT OF PRINCIPAL AND INTEREST. The Company shall duly and punctually pay the principal of and interest on this Note in accordance with the terms of this Note. 4.2 MAINTENANCE OF OFFICE OR AGENCY. The Company shall maintain an office in the State of California and/or New York where this Note may be presented or surrendered for payment, where this Note may be surrendered for transfer or exchange and where notices and demands to or upon the Company in respect of this Note may be served. The Company will give prompt written notice to the Holder of the location, and of any change in the location, of such office. 4.3 MAINTENANCE OF BOOKS AND RECORDS. The Company shall, and shall cause any subsidiary to, keep true books and records in which full and correct entries will be made of all its business transactions, in accordance with sound business practices, and reflect in its financial statements adequate accruals and appropriations to reserves, all in accordance with generally accepted accounting principals. 4.4 CORPORATE EXISTENCE. The Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights (charter and statutory) and franchise; PROVIDED, HOWEVER, that the Company shall not be required to preserve any right or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Holder. 4.5 COMPLIANCE. The Company shall timely comply with the filing requirements of the U. S. Securities and Exchange Commission ("COMMISSION") and the Over the Counter Bulletin Board or other market on which the Common Stock is then traded, if applicable, with respect to its obligations to file periodic 5 reports under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"). 4.6 FINANCIAL STATEMENTS AND INFORMATION. The Company will mail or deliver to the Holder: (a) QUARTERLY STATEMENTS. Within sixty (60) days after the close of each of the three interim quarterly accounting periods of the Company, an unaudited balance sheet of the Company as of the end of such period and the related statements of operations, stockholders' equity and changes in the financial position for such period. (b) ANNUAL STATEMENTS. Within one hundred and twenty (120) days after the close of the fiscal year of the Company, an audited balance sheet of the Company as of the end of the year and the related statements of operations, stockholders' equity and changes in financial position for the periods then ended. (c) OTHER STATEMENTS, ETC. Copies of all such financial statements, reports and proxy statements as the Company shall send to or make available to its stockholders or which it shall file with the Commission. (d) COMPLIANCE. So long as the Company is registered under the Exchange Act, the obligations under Sections 4.6(a) and (b) shall be satisfied by the filing on the Commission's EDGAR system of the Company's Quarterly Report on Form 10-Q for the quarter then ended and the Annual Report on Form 10-K for the fiscal year then ended. 4.7 COMMON STOCK ISSUABLE UPON CONVERSION. (a) The Company covenants that all Conversion Shares which may be issued upon conversion of this Note shall, upon issuance, be fully paid and non-assessable, free from all taxes, liens and charges with respect to the issue thereof, except restrictions on resale or other transfer imposed under the Securities Act of 1933, as amended, and the Company's by-laws and certificate of incorporation, and as may be hereafter amended or restated. (b) The Company covenants that as soon as practicable after the final closing of the Offering pursuant to which this Note is being issued, the Company shall cause a special meeting of its stockholders to be held for the purpose of amending the Company's certificate of incorporation to increase the Company's authorized Common Stock, and upon obtaining such approval it will at all times reserve and keep available out of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue the shares of Common Stock or other Conversion Shares upon conversion of the Notes as required hereunder, the number of shares of Common Stock or other Conversion Shares which are then issuable and deliverable upon the conversion of (and otherwise in respect of) this entire Note (taking into account the adjustments set forth in Section 2.5 hereof, free from preemptive rights or any other contingent purchase rights of persons other than the Holder. 4.8 RESTRICTION ON PAYMENT OF DIVIDEND AND STOCK REPURCHASES. The Company may not, directly or indirectly, (i) declare or pay any dividend on, or make any distribution to its stockholders of, any shares of its Common Stock, or (ii) purchase, redeem or otherwise acquire or retire for value any shares of 6 outstanding Common Stock, without the consent of the Requisite Holders (as hereinafter defined) as of the date of such consent, which shall not be unreasonably withheld or delayed. As used in this Note, the term "REQUISITE HOLDERS" means the holders of a majority of the aggregate outstanding principal amount of this Note and the Bridge Notes. 4.9 TAXES. The Company shall, and cause any subsidiary to, pay prior to delinquency all taxes, assessments and governmental levies, federal, state and provincial or local, except as contested in good faith and by appropriate proceedings. 4.10 INCURRING CERTAIN ADDITIONAL INDEBTEDNESS. Unless otherwise agreed to in writing by the Requisite Holders, the Company shall not issue any debt securities which provide that such securities shall rank senior to this Note and the other Bridge Notes, except to the extent permitted in Section 3.2 hereof. 4.11 INSURANCE. The Company shall (i) keep all of its properties adequately insured at all times with responsible insurance carriers against loss or damage by fire and other hazards, and (ii) maintain adequate insurance at all times with responsible insurance carriers against liability on account of damage or injury to persons and property including from product liability and under all applicable workmen's compensation laws. 5. EVENTS OF DEFAULT; REMEDIES. 5.1 EVENTS OF DEFAULT. "Event of Default," wherever used herein means any one of the following events (whatever the reason for such Event of Default and whether it shall be effected by operation of law pursuant to any judgment, decree or order of any court of any order; rule or regulation of any administrative or governmental body): (a) the Company shall fail to pay any amounts owed hereunder as required by the terms of this Note within five (5) business days after such payment becomes due and payable whether at its maturity or otherwise; or (b) the Company shall fail to perform or observe or otherwise breach any covenant, agreement or provision to be performed or observed by the Company under this Note (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of ten (10) days after notice of such failure or breach had been received by the Company; or (c) an event of default shall have occurred and be continuing in any of the Bridge Notes, the Cheshire Note or the Cornell Debenture; or (d) the entry of a decree or order by a court of competent jurisdiction adjudging the Company bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under the federal bankruptcy laws or any other applicable act, law or statute of the United States or any state, district or territory thereof, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or ordering the winding up or liquidation of 7 its affairs, and the continuance of any such decree or order unstayed and in effect for a period of sixty (60) consecutive days; or (e) the institution by the Company of proceedings to be adjudicated bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under the federal bankruptcy laws or any other applicable act, law or statute of the United States or any state, district or territory thereof, or the consent by it to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the taking of corporate action by the Company in furtherance of any such action; or (f) the Company shall have entered against it a final judgment by a court of competent jurisdiction which, if satisfied, would have a material adverse effect on the financial condition of the Company, and the same shall remain undischarged for a period of twenty (20) days during which execution shall not be effectively stayed or bonded; or (g) the Company shall be in default in the payment in excess of Fifty Thousand Dollars ($50,000) of money borrowed in one or more transactions (excluding money borrowed under the Bridge Notes, the Cheshire Note or the Cornell Debenture which is covered by Section 5.1(c) hereof), the lender(s) thereof shall have declared the amount in default and such default shall not have been cured or contested in good faith for a period of twenty (20) days after such declaration; or (h) the Company shall fail to perform or observe or otherwise breach, in any material respect, any covenant, agreement or provision to be performed or observed by it under the Security Agreement or the Intercreditor Agreement, and such failure shall not be rectified or cured within ten (10) days after written notice of such failure or breach has been received by the Company; or (i) if the Company shall suspend its operations and such suspension shall remain in effect for a continuous period exceeding thirty (30) days; or (j) any representation or warranty of the Company made to the Holder in, pursuant to or in connection with this Note, the Security Agreement or the Intercreditor Agreement, shall be false in any material respect on the date as of which it was made and such breach shall not be rectified or cured within ten (10) days after written notice thereof by any Holder to the Company; or (k) if, after 75 days from the final closing of the Offering of the Bridge Notes, the Company fails to have available a sufficient number of authorized but unissued and otherwise unreserved shares of Common Stock available for issuance upon any conversion of the Note. 5.2 ENFORCEMENT OF REMEDIES. In case an Event of Default (other than an Event of Default described in Section 5.1(d) and 5.1(e) hereof) has occurred and is continuing, the Agent, or its successor, as agent on behalf of the Holder and the holders of the Bridge Notes, acting upon the direction of the Requisite Holders by written notice to the Company, may declare the principal amount of this Note, plus accrued interest, to be immediately due and payable, and upon any such declaration such principal and accrued interest shall become due and payable immediately without presentation, protest, further demand or notice of any kind, all of which are hereby expressly waived by the Company and all 8 endorsers of this Note. In case an Event of Default described in Sections 5.1(d) or 5.1(e) above occurs, such amounts will become due and payable without any declaration or any act on the part of the Agent or the Holder and the Company and all endorsers of this Note hereby expressly waive presentment for payment, protest, further demand or notice of any kind. 5.3 NOTICE TO HOLDERS OF RECORD. If a Holder of any of the Bridge Notes shall demand payment thereof or take any other action of which the Company shall have actual knowledge in respect of an alleged default under the Bridge Notes, the Company will promptly give written notice, specifying such action and nature of the alleged default, to the Holder. 5.4 WAIVER BY COMPANY. To the extent permitted by applicable law, the Company hereby agrees to waive, and does hereby absolutely and irrevocably waive and relinquish the benefit and advantage of any valuation, stay, appraisement, extension or redemption laws now existing or which may hereafter exist, which, but for this provision might be applicable to any sale made under the judgment, order or decree of any court or otherwise, based on this Note or any claim for interest on this Note or under the Security Agreement or any foreclosure thereunder. 5.5 MODIFICATIONS AND WAIVERS. No course of dealing between the Company and the Holder and no delay on the part of the Holder or the Agent in exercising any of the Holder's rights under this Note shall operate as a waiver of the rights of the Holder under this Note. Any provision of this Note and the Bridge Notes to the contrary notwithstanding, changes in or additions to this Note and the Bridge Notes may be made, and compliance with any term, covenant, condition or provision set forth in this Note or the Bridge Notes may be omitted or waived (either generally or in a particular instance and either retroactively or prospectively), and any default or Event of Default and the consequences thereof may be waived, by a consent or consents in writing signed by the Company and the Requisite Holders; PROVIDED, HOWEVER, that (i) the Company shall deliver copies of the form of such consent or consents to the Holder or any holder of the Bridge Notes if the Holder or such other holder did not execute the same; (ii) no such consent shall be effective to reduce the principal of or rate of interest payable on this Note without the consent of the Holder if this Note is so affected; (iii) no such consent shall be effective to change the percentage of principal amount of this Note and the Bridge Notes the consent of the holders of which is required under this Section 5.5; and (iv) no such consent shall extend to or impair any obligation not expressly waived or impair any right consequent thereon. Any consent maybe given subject to satisfaction of conditions stated therein. A waiver on any occasion shall not be construed as a bar to or a waiver of any such right or remedy on any future occasion. 5.6 COST AND EXPENSE OF COLLECTION. The Company and all endorsers of this Note will, to the extent permitted under applicable law, pay to the Holder all reasonable costs and expenses of collection and enforcement of this Note, including, without limitation, reasonable fees and expenses of the attorneys of the Holder. 6. LOST NOTE. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note, and (in case of loss, theft or destruction) of indemnity satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Note, if mutilated, the Company will make and deliver a new Note of like tenor in LIEU of such Note. 9 7. MISCELLANEOUS PROVISIONS. 7.1 BENEFITS. This Note shall be binding upon the Company and its successors and assigns and shall inure to the benefit of the Holder and its heirs, administrators and permitted assigns and transferees. 7.2 NOTICES. All communications provided for herein or with reference to this Note shall be deemed to have been sufficiently given or served for all purposes if delivered in person, or three (3) business days after being sent by certified or registered mail, postage and charges prepaid, or one (1) business day after being sent by recognized overnight courier, to the following addresses: if to the Company, at its office, 5931 Darwin Court, Carlsbad, California, 92008; Attention: President, or to the Holder at its address set forth in the records of the Company, or at any other address duly designated by the Company or the Holder to the other. 7.3 ENTIRE AGREEMENT. This Note, together with the Security Agreement and the Intercreditor Agreement, sets forth the entire agreement between the Company and the Holder with respect to the subject matter contained herein. If there is a conflict between the provisions in this Note and the provisions of the Security Agreement or the Intercreditor Agreement, the provisions of this Note shall govern. 7.4 SEVERABLE. If any term or provision of this Note shall be held invalid, illegal or unenforceable, the validity, legality and enforceability of all other terms and provisions hereof shall in no way be affected thereby. 7.5 AMENDMENT. Subject to Section 5.5, this Note may not be changed modified, or amended except by an agreement in writing signed by the Company and the Holder. 7.6 GOVERNING LAW. This Note shall be deemed to be a contract made under, and to be construed in accordance with, the laws of the State of New York, without giving effect to conflicts of law. 7.7 JURISDICTION OF DISPUTES; WAIVER OF JURY TRIAL. In the event of any claim under this Note with respect to any matters described or contemplated herein, the Holder and the Company agree (i) that any legal suit, action or proceeding arising out of or relating to this Note shall be instituted exclusively in New York State Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, (ii) waive any objection which a party may have now or hereafter to the venue of any such suit, action or proceeding, and (iii) irrevocably consent to the jurisdiction of the New York State Supreme Court, County of New York, and the United States District Court for the Southern District of New York in any such suit, action or proceeding. Each of the Holder and the Company further agrees to accept and acknowledge service of any and all process which may be served in any such suit, action or proceeding in the New York State Supreme Court, County of New York, or in the United States District Court for the Southern District of New York and agree that service of process upon it mailed by certified mail to its address set forth herein shall be deemed in every respect effective service of process upon it, in any such suit, action or proceeding. THE HOLDER AND THE COMPANY EACH WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY PROCEEDING IN CONNECTION WITH THIS 10 NOTE, AND AGREES TO TAKE ANY AND ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH WAIVER. 7.8 SECTION HEADINGS. The descriptive section headings herein have been inserted for convenience only and shall not be deemed to limit or otherwise affect the construction of any provisions hereof. 7.9 INVESTMENT INTENT. The Holder represents, by acceptance of this Note and the associated common stock purchase warrant (the "Warrant") issued to the Holder in connection with the issuance of this Note, that it is acquiring this Note, and the Warrant and would acquire the Common Stock underlying this Note and the Warrant, for its own account for investment and not with a view to distribution. 11 IN WITNESS WHEREOF, the Company has caused this Note to be signed in its corporate name by its President, attested by its Secretary, and dated the day and year first above written. THE IMMUNE RESPONSE CORPORATION By: /s/ Joseph F. O'Neill ---------------------------------- Joseph F. O'Neill, CEO & President ATTEST: By: /s/ Michael R. Green ---------------------------------- Michael R. Green, Secretary 12 ATTACHMENT I NOTICE OF CONVERSION OF 8% SENIOR SECURED CONVERTIBLE PROMISSORY NOTE TO: THE IMMUNE RESPONSE CORPORATION Pursuant to the 8% Senior Secured Convertible Promissory Note (the "Note"), attached hereto, dated February 9, 2006, issued by The Immune Response Corporation, a Delaware corporation (the "Company"), to the undersigned (the "Holder"), the Holder hereby: 1) Irrevocably elects to convert the principal and accrued interest under the Note into Conversion Shares, as defined in the Note, in the amount of _________ Dollars ($_______) (in the event no amount is specified, the entire principal and accrued interest outstanding under the Note shall be converted); 2) Requests that a certificate for the Conversion Shares be issued in the name of undersigned, or, in the name and address of another person (the "Assignee") are specified below provided, that, if the Conversion Shares are not covered by a registration statement effective under the Securities Act of 1933, the Assignee shall deliver a representation letter in form satisfactory to the Company: _____________________________________________ _____________________________________________ _____________________________________________ (Name, address and tax identification number of person other than undersigned in whose name Conversion Shares are to be registered). 3) Requests that, if the entire principal and accrued interest outstanding is not hereby converted into Conversion Shares, a new Note of like tenor for the remaining outstanding balance be issued and delivered to the undersigned at the address stated below. Dated:_________________________ ______________________________________ Signature (This signature must conform in all respects to the name of the Holder as specified on the face of the Note.) ________________________________ _______________________________________ Tax Identification Number Printed Name Address:________________________ ________________________________ EX-99 5 exhibit994.txt EXHIBIT 99.4 Exhibit 99.4 THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE SECURITIES ACT OR UNDER STATE SECURITIES LAWS. THIS WARRANT MAY NOT BE SOLD, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO THE EXPRESS PROVISIONS OF THIS WARRANT, AND NO SALE, ASSIGNMENT, TRANSFER, OR OTHER DISPOSITION OF THIS WARRANT SHALL BE VALID OR EFFECTIVE UNLESS AND UNTIL SUCH PROVISIONS SHALL HAVE BEEN COMPLIED WITH. Date of Issuance: February 9, 2006 THE IMMUNE RESPONSE CORPORATION STOCK PURCHASE WARRANT The Immune Response Corporation, a Delaware corporation (the "COMPANY"), for value received, hereby certifies and agrees that Qubit Holdings, LLC or its registered assigns (the "REGISTERED HOLDER"), is entitled, subject to the terms set forth below, to purchase Thirty-Seven Million Five Hundred Thousand (37,540,000) duly authorized, validly issued, fully paid and nonassessable shares of common stock, par value $0.0025 per share, of the Company (the "COMMON STOCK") from the Company. This Warrant is exercisable at any time or from time to time in two equal tranches as follows: (A) with respect to the first 18,750,000 shares of Common Stock on or after the first business day following the date on which an amendment to the certificate of incorporation of the Company is filed with the Secretary of State of the State of Delaware increasing the authorized shares of the Common Stock in an amount sufficient to provide for the exercise hereof and shall expire with respect to the first 18,750,000 shares of Common Stock at 5:00 p.m. New York time on the later of (i) May 31, 2006 or (ii) the date that is forty-five (45) days after the Company has notified the Registered Holder of either (a) the effectiveness of a registration statement filed with the Securities and Exchange Commission registering (either for initial issuance or resale) the shares of Common Stock issuable upon exercise of this Warrant or (b) a reorganization, reclassification, consolidation, merger or disposition of assets of the Company pursuant to Section 5(b) of this Warrant (the "FIRST EXERCISE PERIOD"); and (B) with respect to the second 18,750,000 shares of Common Stock, during the period commencing seventy (70) days following the expiration of the First Exercise Period (the "SECOND EXERCISE DATE") and expiring at 5:00 pm New York time on the date that is forty-five (45) days following the expiration of the Second Exercise Date (the "SECOND EXERCISE PERIOD" and collectively with the First Exercise Period, the "EXERCISE PERIOD"); provided, however, that the Company, in its sole discretion and upon notice to the Registered Holder, may extend either the First Exercise Period or Second Exercise Period; provided, further, that in no event whatever may this Warrant be exercised after April 30, 2011. The initial exercise price per Warrant Share (as defined below) is equal to $0.02 per share, subject to adjustment in certain cases as described herein. The shares purchasable upon exercise of this Warrant, and the purchase price per share, are hereinafter referred to as the "WARRANT SHARES" and the "EXERCISE PRICE," respectively. The term "WARRANT" as used herein shall include this Warrant and any other warrants delivered in substitution or exchange therefor, as provided herein. 1. METHOD OF EXERCISE (a) This Warrant may be exercised (but only during the First Exercise Period or the Second Exercise Period, as applicable) by the Registered Holder, in whole or in part, by surrendering this Warrant, with a Notice of Exercise in the form of Annex A hereto (the "NOTICE OF EXERCISE") duly executed by such Registered Holder or by such Registered Holder's duly authorized attorney, at the principal office of the Company set forth on the signature page hereto, or at such other office or agency as the Company may designate in writing (the "COMPANY'S OFFICE"), accompanied by payment in full, in lawful money of the United States, of the Exercise Price payable in respect of the number of shares of Warrant Shares purchased upon such exercise. (b) Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which the Notice of Exercise, together with this Warrant and payment in full of the Exercise Price, shall be dated and directed to the Company (as evidenced by the applicable postmark or other evidence of transmittal) as provided in Section 1(a) hereof. At such time, the person or persons in whose name or names any certificates for Warrant Shares, shall be issuable upon such exercise as provided in Section 1(c) hereof shall be deemed to have become the holder or holders of record of the Warrant Shares represented by such certificates. (c) As soon as practicable after the exercise of this Warrant, in full or in part, and in any event within ten (10) days thereafter, the Company, at its expense, will cause to be issued in the name of, and delivered to, the Registered Holder, or as such Registered Holder (upon payment by such Registered Holder of any applicable transfer taxes) may direct: (i) a certificate or certificates for the number of full Warrant Shares to which such Registered Holder shall be entitled upon such exercise plus, in lieu of any fractional share to which such Registered Holder would otherwise be entitled, cash in an amount determined pursuant to Section 3 hereof; and (ii) in case such exercise is in part only, a new warrant or warrants (dated the date hereof) of like tenor, representing in the aggregate on the face or faces thereof the number of Warrant Shares equal (without giving effect to any adjustment therein) to the number of such shares called for on the 2 face of this Warrant minus the number of such shares purchased by the Registered Holder upon such exercise (after reversing the effects of any prior adjustments made). 2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company covenants and agrees that all shares of Common Stock which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance by the Company, be validly issued, fully paid and nonassessable, and free from preemptive rights and free from all taxes, liens and charges with respect thereto. The Company further covenants and agrees that, subsequent to the issuance of this Warrant, the Company shall cause a special meeting of its stockholders to be held for the purpose of amending the Company's certificate of incorporation to increase the Company's authorized Common Stock, and upon obtaining such approval it will at all times reserve and keep available out of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue the shares of Common Stock upon exercise of this Warrant as required hereunder, the number of shares of Common Stock which are then issuable and deliverable upon the exercise of (and otherwise in respect of) this entire Warrant (taking into account the adjustments set forth in Section 5 hereof), free from preemptive rights or any other contingent purchase rights of persons other than the Registered Holder of this Warrant. 3. FRACTIONAL SHARES. The Company shall not be required upon the exercise of this Warrant to issue any fractional shares, but shall pay to the Registered Holder an amount in cash equal to the value of such fractional share for each such fractional share of the Company's Common Stock which would be issuable upon exercise of this Warrant. 4. REQUIREMENTS FOR TRANSFER. (a) WARRANT REGISTER. The Company will maintain a register (the "WARRANT REGISTER") containing the names and addresses of the Registered Holder or Registered Holders. Any Registered Holder of this Warrant or any portion thereof may change its address as shown on the Warrant Register by written notice to the Company requesting such change, and the Company shall promptly make such change. Until this Warrant is transferred on the Warrant Register of the Company, the Company may treat the Registered Holder as shown on the Warrant Register as the absolute owner of this Warrant for all purposes, notwithstanding any notice to the contrary; PROVIDED, HOWEVER, that if and when this Warrant is properly assigned in blank, the Company may, but shall not be obligated to, treat the bearer hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary. (b) TRANSFER. Subject to the provisions of this Section 4, this Warrant and all rights hereunder are transferable, in whole or in part, upon the surrender of this Warrant with a properly executed Assignment Form in substantially the form attached hereto as Annex B (the "ASSIGNMENT") at the Company's Office; PROVIDED, HOWEVER, that in no event shall this warrant be transferable to any person who is not an "accredited investor" as such term is defined in Rule 501 of Regulation D promulgated under Section 4(2) of the Securities Act of 1933, as amended. (c) EXCHANGE OF WARRANT UPON A TRANSFER. On surrender of this Warrant for exchange, properly endorsed on the Assignment and subject to the provisions of this Warrant and with the limitations on assignments and transfers as contained in this Section 4, the Company at its expense shall issue to or on the 3 order of the Registered Holder a new warrant or warrants of like tenor, in the name of the Registered Holder or as the Registered Holder (on payment by the Registered Holder of any applicable transfer taxes) may direct, for the number of shares issuable upon exercise hereof. 5. ADJUSTMENT. (a) ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the following. In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive upon exercise of this Warrant (instead of the prior kind and number of Warrant Shares or other securities, into which, in fact, this Warrant would then no longer be exercisable) the kind and number of Warrant Shares or other securities of the Company which it would have owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder, the Holder shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment and dividing by the number of Warrant Shares or other securities of the Company that are purchasable pursuant hereto immediately after such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event. (b) REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR DISPOSITION OF ASSETS. In case the Company shall reorganize its capital, reclassify its capital stock, consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Company), or be acquired by reverse triangular merger, or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another corporation (including by way of a spin-off) and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation ("OTHER PROPERTY"), are to be received by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right thereafter to receive upon exercise of this Warrant (instead of the prior kind and number of Warrant Shares or other securities, into which, in fact, this Warrant would then no longer be exercisable), the number of shares of common stock of the successor or acquiring corporation or shares of Common Stock of the Company, if it is the surviving 4 corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 5(b). For purposes of this Section 5(b), "common stock of the successor or acquiring corporation" shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 5(b) shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets. (c) NOTICE OF ADJUSTMENT. Upon the occurrence of any event which requires any adjustment of the Exercise Price, then and in each such case the Company shall give notice thereof to the Registered Holder, which notice shall state the Exercise Price, resulting from such adjustment and the increase or decrease, if any, in the number of Warrant Shares purchasable at such price upon exercise, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. (d) NO ADJUSTMENT OF EXERCISE PRICE IN CERTAIN CASES. No adjustment of the Exercise Price shall be made if the amount of said adjustment shall be less than one cent ($0.01) per security issuable upon exercise of this Warrant; PROVIDED, HOWEVER, that in such case any adjustment that would otherwise be required then to be made shall be carried forward and shall be made at the time of and together with the next subsequent adjustment which, together with any adjustment so carried forward, shall amount to at least one cent ($0.01) per security issuable upon exercise of this Warrant. 5 6. NO RIGHTS OF STOCKHOLDERS. Subject to other Sections of this Warrant, the Registered Holder shall not be entitled to vote, to receive dividends or subscription rights, nor shall anything contained herein be construed to confer upon the Registered Holder, as such, any of the rights of a stockholder of the Company, including without limitation any right to vote for the election of directors or upon any matter submitted to stockholders, to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance, or otherwise), to receive notices, or otherwise, until the Warrant shall have been exercised as provided herein. 7. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor. 8. MAILING OF NOTICES, ETC. All notices and other communications from the Company to the Registered Holder of this Warrant shall be mailed by first-class certified or registered mail, postage prepaid, to the address furnished to the Company in writing by the last Registered Holder of this Warrant who shall have furnished an address to the Company in writing. All notices and other communications from the Registered Holder of this Warrant or in connection herewith to the Company shall be mailed by first-class certified or registered mail, postage prepaid, to the Company at its principal office set forth below. Notice so mailed shall be deemed effective two (2) business days after being deposited with the United States Postal Service. If the Company should at any time change the location of its principal office to a place other than as set forth below, then it shall give prompt written notice to the Registered Holder of this Warrant and thereafter all references in this Warrant to the location of its principal office at the particular time shall be as so specified in such notice. 9. CHANGE OR WAVER. Any term of this Warrant may be changed or waived only by an instrument in writing signed by the party against which enforcement of the change or waiver is sought. 10. HEADINGS. The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant. 11. SEVERABILITY. If any provision of this Warrant shall be held to be invalid and unenforceable, such invalidity or unenforceability shall not affect any other provision of this Warrant. 12. GOVERNING LAW AND SUBMISSION TO JURISDICTION. This Warrant will be governed by, and construed in accordance with, the laws of the State of New York without regard to principles of conflict or choice of laws of any jurisdiction. The parties hereby agree that any action, proceeding or claim against it arising out of, or relating in any way to this Warrant shall be brought and enforced in the courts of the State of New York, and irrevocably submit to such jurisdiction, which jurisdiction shall be exclusive. 6 13. SUPPLEMENTS AND AMENDMENTS. The Company and the Registered Holder may from time to time supplement or amend this Warrant in order to cure any ambiguity, to correct or supplement any provision contained herein which may be defective or inconsistent with any provision herein, or to make any other provisions in regard to matters or questions arising hereunder which the Company and the Holder may deem necessary or desirable. 14. SUCCESSORS. All the covenants and provisions of this Warrant shall be binding upon and inure to the benefit of the Company and the Registered Holder and their respective successors and assigns hereunder. 15. BENEFITS OF THIS WARRANT. Nothing in this Warrant shall be construed to give to any person, entity or corporation other than the Company and the Registered Holder of this Warrant any legal or equitable right, remedy or claim under this Warrant; and this Warrant shall be for the sole and exclusive benefit of the Company and the Registered Holder of this Warrant. 7 IN WITNESS WHEREOF, The Immune Response Corporation has caused this Warrant to be signed by its duly authorized officers and to be dated on the day and year first written above. THE IMMUNE RESPONSE CORPORATION By: /s/ Michael Green --------------------------------- Name: Michael Green Title: Chief Operating Office and Chief Financial Officer Principal Office: 5931 Darwin Court Carlsbad, California 92008 ANNEX A NOTICE OF EXERCISE FORM To: The Immune Response Corporation Dated:________________ 5931 Darwin Court Carlsbad, California 92008 The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby irrevocably elects to purchase _______________ shares of Common Stock covered by such Warrant and herewith makes payment of $__________, representing the full purchase price for shares at the exercise price per share provided for in such Warrant. Signature:_______________________ Print Name:_______________________ Address:_________________________ _________________________ _________________________ ANNEX B ASSIGNMENT FORM FOR VALUE RECEIVED, _______________________________________ hereby sells, assigns and transfers all of the rights of the undersigned under the attached Wan-ant with respect to the number of shares of Common Stock covered thereby set forth below, unto: NAME OF ASSIGNEE ADDRESS NO. OF SHARES Dated:_________________________ Signature:______________________ Dated:_________________________ Witness:_______________________ -----END PRIVACY-ENHANCED MESSAGE-----