Xxxxxxx 0
XXXX XXXXXXXX AGREEMENT
THIS UNIT PURCHASE AGREEMENT (the "Agreement") is made
as of this 15th day of April, 1997 by and between THE IMMUNE
RESPONSE CORPORATION, a Delaware corporation (the "Company"), and
XXXXX X. XXXXXXXXX, an individual (the "Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of the Units.
1.1 Sale and Issuance of Common Stock and Common Stock
Warrants at the Initial Closing. Subject to the terms and
conditions of this Agreement, Investor agrees to purchase at the
Initial Closing and the Company agrees to sell and issue to
Investor at the Initial Closing, 1,776,004 Units at the purchase
price per Unit equal to the product of (a) the sum of (i) the
closing price of the Company's common stock on April 11, 1997
($7.69) and (ii) $1.19 per share of common stock into which the
Warrant (as defined below) is exercisable, multiplied by (b) .879
(the "Per Unit Price"), for an aggregate price of $13,852,831.20
(the "Initial Investment"). Each Unit consists of one share of
the Company's Common Stock, par value $.0025 per share (the
"Common Stock"), and a nontransferable warrant to purchase one
share of the Company's Common Stock (the "Warrant") in the form
attached hereto as Exhibit A.
The shares of Common Stock sold to Investor pursuant to
this Agreement are hereinafter referred to as the "Shares," and
the shares of Common Stock arising from the exercise of the
Warrant are hereinafter referred to as the "Warrant Shares." The
Shares, the Warrant and the Warrant Shares are hereinafter
referred to collectively as the "Securities."
1.2 Sale and Issuance of Common Stock and Common Stock
Warrants at the NASD Approval Closing. Subject only to the
written approval by the National Association of Securities
Dealers, Inc. ("NASD"), which approval must be received by the
Company no later than six weeks from the date hereof in a form
reasonably acceptable to the Company, Investor agrees to purchase
at the NASD Approval Closing and the Company agrees to sell and
issue to Investor at the NASD Approval Closing, 18,867 Units (as
defined above) at the Per Unit Price for an aggregate price of
$147,162.60 (the "NASD Approval Investment").
At the option of Investor, Investor may prepare a
letter for submission by the Company to the NASD outlining the
nature of the Initial Investment and the NASD Approval Investment
and requesting confirmation from the NASD that the NASD Approval
Investment may be consummated without first obtaining approval
from the Company's stockholders. The Company will submit such
letter to the NASD as promptly as practicable after receiving the
same from Investor.
1.3 Initial Closing. The purchase and sale of the
Securities for the Initial Investment shall take place at the
offices of Pillsbury Madison & Sutro LLP, 000 Xxxxxxxxxx Xxxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxx, at 11:00 A.M., on April 15, 1997, or
at such other time and place as the Company and Investor mutually
agree (which time and place are designated as the "Initial
Closing"). At the Initial Closing, Investor shall deliver to
Company (i) a bank wire in the amount of $3,463,207.80 payable to
the Company's order and (ii) a promissory note in the form
attached hereto as Exhibit B in the principal amount of
$10,389,623.40 payable to the Company's order (the "Promissory
Note"). Upon payment in full of all amounts due under the
Promissory Note, the Company shall deliver to Investor the
Warrant and a certificate representing the Shares; provided,
however, that the Company hereby acknowledges that Investor shall
be the sole record and beneficial owner of the Shares upon the
Initial Closing.
1.4 NASD Approval Closing. The purchase and sale of
the securities for the NASD Approval Investment shall take place
at the offices of Pillsbury Madison & Sutro LLP, 000 Xxxxxxxxxx
Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx, within five business days
after receipt by the Company from Investor of written NASD
approval for such sale, or at such other time and place as the
Company and Investor mutually agree (which time and place are
designated as the "NASD Approval Closing"). At the NASD Approval
Closing, the Company shall deliver to Investor 18,867 Units
against delivery to the Company by Investor of a bank wire in the
amount of $147,162.60 payable to the Company's order.
2. Representations and Warranties of the Company.
2.1 Organization, Good Standing and Qualification.
The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and is
duly qualified as a foreign corporation in all jurisdictions in
which the failure to so qualify would have a material adverse
effect on the Company.
2.2 Valid Issuance of the Securities. The issuance,
sale and delivery of the Securities are within the Company's
corporate powers and have been duly authorized by all required
corporate action on the part of the Company and its stockholders
and when such Securities are issued, sold and delivered in
accordance with the terms hereof, such Securities will be duly
and validly issued, fully paid and nonassessable. The issuance,
sale and delivery of the Securities are not subject to preemptive
or any similar rights of the stockholders of the Company or any
liens or encumbrances arising through the Company.
2.3 Authorization. This Agreement has been duly
authorized, validly executed and delivered on behalf of the
Company and is a valid and binding agreement enforceable against
the Company in accordance with its terms, except (i) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of
creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or
other equitable remedies and (iii) to the extent the
indemnification provisions contained in Section 7.8 of this
Agreement may be limited by applicable federal or state
securities laws.
2.4 Capitalization. The authorized capital of the
Company consists of:
(a) Preferred Stock. 5,000,000 shares of Preferred
Stock, of which 20,000 shares have been designated Series E
Participating Preferred Stock, par value $.001 per share (the
"Participating Preferred Stock"). There are no shares of
Participating Preferred Stock issued and outstanding.
(b) Common Stock. 40,000,000 shares of Commons Stock,
of which 20,298,207 shares were issued and outstanding on April
10, 1997.
(c) Agreements for Purchase of Shares. Except for (i)
the purchase privileges under the Company's Stockholder Rights
Plan, as described in the Company's filings with the Securities
and Exchange Commission ("SEC"); (ii) options to purchase an
aggregate of 2,963,155 shares of Common Stock granted pursuant to
the various stock plans of the Company as of February 28, 1997;
and (iii) the agreement of Trinity Medical Group Co., Ltd of
Bangkok, Thailand to make an additional equity investment of up
to $10 million, there are no outstanding options, warrants,
rights (including conversion or preemptive rights) or agreements
for the purchase or acquisition from the Company of any shares of
its capital stock. The Company has no obligations or agreements
concerning the repurchase of any of the shares of its outstanding
capital stock.
2.5 Non-contravention. The execution and delivery of
this Agreement and the consummation of the issuance of the
Securities do not and will not conflict with or result in a
breach by the Company of any of the terms or provisions, of or
constitute a default under the certificate of incorporation or
by-laws of the Company, or any indenture, mortgage, deed of
trust, or other material agreement or instrument to which the
Company is a party or by which it or any of its properties or
assets are bound, or any existing applicable law, rule or
regulation of the United States or any state thereof or any
applicable decree, judgment or order of any federal or state
court, federal or state regulatory body, administrative agency or
other United States governmental body having jurisdiction over
the Company or any of its properties or assets.
2.6 Rights Agreement. As a registered holder of the
Shares, Investor will be a beneficiary under that certain Rights
Agreement, dated as of February 26, 1992, between the Company and
First Interstate Bank, Ltd. (the "Rights Agreement"), and will be
entitled to receive one Right for each share of Common Stock
issued pursuant to this Agreement, including the Warrant Shares,
each Right representing the right to purchase one one-thousandth
of a share of Participating Preferred Stock having the rights,
powers and preferences set forth in the Rights Agreement. The
Company shall amend the Rights Agreement so that the execution
and delivery of this Agreement and the consummation of the
issuance of the Securities will not cause Investor to become an
Acquiring Person (as defined in the Rights Agreement) thereunder.
2.7 SEC Filings. The Company has registered its
Common Stock pursuant to Section 12 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the Common
Stock is listed and trades on the NASDAQ National Market System.
The Company has filed all forms, reports and documents required
to be filed pursuant to the federal securities laws and the rules
and regulations promulgated thereunder for a period of at least
twelve (12) months immediately preceding the offer or sale of the
Shares and the Warrant (or for such shorter period that the
Company has been required to file such material). The Company's
filings with the SEC complied as of their respective filing
dates, or in the case of registration statements, their
respective effective dates, in all material respects with all
applicable requirements of the Securities Act of 1933 (the
"Securities Act") and the Exchange Act and the rules and
regulations promulgated thereunder. None of such filings,
including, without limitation, any exhibits, financial statements
or schedules included therein, at the time filed, or in the case
of registration statements, at their respective filing dates,
contained any untrue statement of a material fact or omitted 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.
2.8 Litigation. Except as disclosed in the Company's
filings with the SEC, there is no action, suit or proceeding
before or by any court or governmental agency or body, domestic
or foreign, now pending or, to the knowledge of the Company,
threatened, against or affecting the Company, or any of its
properties, which might result in any material adverse change in
the condition (financial or otherwise) or in the earnings,
business affairs or business prospects of the Company, or which
might materially and adversely affect the properties or assets
thereof.
2.9 No Default. Except as disclosed in the Company's
filings with the SEC, the Company is not in default in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed
of trust or other material agreement or instrument to which it is
a party or by which it or its property may be bound.
2.10 Subsequent Events. Since December 31, 1996, (i)
the Company has incurred no liability or obligation, contingent
or otherwise, that taken as a whole, is material in the aggregate
to the Company, except in the ordinary course of business, and
(ii) there has been no material adverse change in the condition
or results of operations, financial or otherwise, of the Company,
taken as a whole.
2.11 Consents and Approvals. No consent, approval,
qualification, order or authorization of, or filing with, any
local, state or federal governmental authority or any third party
is required on the part of the Company in connection with the
Company's valid execution, delivery or performance of this
Agreement, or the offer, sale or issuance of the Shares by the
Company, other than the filings that have been made prior to the
Initial Closing or the NASD Approval Closing, as the case may be,
except that any notices of sale required to be filed by the
Company with the SEC under Regulation D of the Securities Act, or
such post-closing filings as may be required under applicable
state securities laws, which will be timely filed within the
applicable periods therefor.
2.12 Registration Statement. To the best of the
Company's knowledge, there exist no facts or circumstances that
would inhibit or delay the preparation and filing of a
registration statement with the SEC under the Securities Act in
accordance with Section 7 of this Agreement.
2.13 Removal of Legends.
(a) Any legend endorsed on a certificate pursuant to
Section 3.7 hereof shall be removed (i) if the shares of the
Common Stock represented by such certificate shall have been
effectively registered under the Securities Act or otherwise
lawfully sold in a public transaction, (ii) if such shares may be
transferred in compliance with Rule 144(k) promulgated under the
Securities Act, or (iii) subject to the provisions of Section
3.6(c) hereof, if the holder of such shares shall have provided
the Company with an opinion of counsel, in form and substance
acceptable to the Company and its counsel and from attorneys
reasonably acceptable to the Company and its counsel, stating
that a public sale, transfer or assignment of such shares may be
made without registration.
(b) Any legend endorsed on a certificate pursuant to
Section 3.7(c) hereof shall be removed if the Company receives an
order of the appropriate state authority authorizing such removal
or if the holder of the Shares provides the Company with an
opinion of counsel, in form and substance acceptable to the
Company and its counsel and from attorneys reasonably acceptable
to the Company and its counsel, stating that such state legend
may be removed.
2.14 Finder's Fee. The Company neither is nor will be
obligated for any finder's fee or commission in connection with
this transaction. The Company agrees to indemnify and hold
harmless Investor from any liability for any commission or
compensation in the nature of a finder's fee (and the costs and
expenses of defending against such liability or asserted liabil-
ity) for which the Company or any of its officers, employees or
representatives is responsible.
3. Representations, Warranties and Covenants of
Investor. Investor hereby represents and warrants that:
3.1 Authorization. Investor has full power and
authority to enter into this Agreement and this Agreement
constitutes its valid and binding obligation except (i) as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by
laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) to the
extent the indemnification provisions contained in Section 7.8 of
this Agreement may be limited by applicable federal or state
securities laws.
3.2 Purchase Entirely for Own Account. The Securities
to be received by Investor will be acquired for investment for
Investor's own account, not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof, and
Investor has no present intention of selling, granting any
participation in, or otherwise distributing the same, except in
compliance with the Securities Act and applicable state
securities laws. Investor does not have any contract, under-
taking, agreement or arrangement with any person to sell, trans-
fer or grant participations to such person or to any third
person, with respect to any of the Securities.
3.3 Disclosure of Information. Investor believes it
has received all the information it considers necessary or
appropriate for deciding whether to purchase the Securities.
Investor further represents that it has had an opportunity to ask
questions and receive answers from the Company regarding the
terms and conditions of the offering of the Securities. The
foregoing, however, does not limit or modify the representations
and warranties of the Company in Section 2 of this Agreement or
the right of Investor to rely thereon.
3.4 Investment Experience. Investor is an investor in
securities of companies in the development stage and acknowledges
that it is able to bear the economic risk of its investment and
has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of
the investment in the Securities.
3.5 Restricted Securities. Investor understands that
the Securities are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired
from the Company in a transaction not involving a public offering
and that under such laws and applicable regulations such
securities may be resold without registration under the
Securities Act only in reliance on an exemption therefrom. In
this connection Investor represents that it is familiar with SEC
Rule 144, as presently in effect ("Rule 144"), and understands
the resale limitations imposed thereby and by the Securities Act.
3.6 Further Limitations on Disposition. Without in
any way limiting the representations set forth above, Investor
further agrees not to make any disposition of all or any portion
of the Securities unless and until:
(a) One (1) year from the date hereof has elapsed; and
(b) The entire principal balance of the promissory
note attached hereto as Exhibit B, together with all accrued and
unpaid interest, fees and late charges thereon, has been paid in
full by Investor to the Company; and
(c) There is then in effect a Registration Statement
under the Securities Act covering such proposed disposition and
such disposition is made in accordance with such Registration
Statement; or
(d) (i) Such Investor shall have notified the Company
of the proposed disposition and shall have furnished the Company
with a reasonably detailed statement of the circumstances sur-
rounding the proposed disposition, and (ii) if reasonably
requested by the Company, such Investor shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to
the Company, that such disposition will not require registration
of such shares under the Securities Act. It is agreed that the
Company will not require opinions of counsel for transactions
made pursuant to Rule 144, as currently in existence, except in
unusual circumstances.
3.7 Legends. Each certificate representing any of the
Securities shall bear substantially one or all of the following
legends:
(a) In the Case of All Securities:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT").
THE SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS REGISTERED UNDER THE 1933 ACT AND
QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS
SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND THE
QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES
LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND
QUALIFICATION ARE NOT REQUIRED. THE SECURITIES REPRESENTED
BY THIS CERTIFICATE AND THE RIGHTS OF HOLDERS THEREOF ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OTHER
RESTRICTIONS, AND THE HOLDER OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE (INCLUDING ANY FUTURE HOLDERS) IS BOUND
BY THE TERMS OF A UNIT PURCHASE AGREEMENT BETWEEN THE
ORIGINAL PURCHASER AND THE COMPANY (COPIES OF WHICH MAY BE
OBTAINED FROM THE COMPANY).
(b) In the Case of the Warrant:
THIS WARRANT IS NON-TRANSFERABLE AND MAY ONLY BE EXERCISED
BY THE ORIGINAL PURCHASER.
(c) Any legend required by the laws of the State of
California or other jurisdiction, including any legend required
by the California Department of Corporations and sections 417 and
418 of the California Corporations Code.
3.8 Accredited Investor. Investor is an accredited
investor as defined in Rule 501(a) of Regulation D under the
Securities Act.
3.9 Confidentiality. Investor hereby represents,
warrants and covenants that Investor shall maintain in confi-
dence, and shall not use or disclose without the prior written
consent of the Company, any information identified as confiden-
tial that is furnished to Investor by the Company in connection
with this Agreement. This obligation of confidentiality shall
not apply, however, to any information (a) in the public domain
through no unauthorized act or failure to act by Investor,
(b) lawfully disclosed to Investor by a third party who possessed
such information without any obligation of confidentiality or (c)
known previously by Investor or lawfully developed by Investor
independent of any disclosure by the Company. Investor further
covenants that Investor shall return to the Company all tangible
materials containing such information upon request by the
Company.
3.10 Finder's Fee. Investor neither is nor will be
obligated for any finder's fee or commission in connection with
this transaction. Investor agrees to indemnify and hold harmless
the Company from any liability for any commission or compensation
in the nature of a finder's fee (and the costs and expenses of
defending against such liability or asserted liability) for which
the Investor or any of its officers, partners, employees or
representatives is responsible.
3.11 Covenant. Investor hereby covenants and agrees to
pledge shares of capital stock (i) set forth on Schedule 1 to the
Stock Pledge Agreement between the Company and Investor as
collateral for the Promissory Note and (ii) set forth on Schedule
1 to the Stock Pledge Agreement among the Company, Investor and
Xxxxxx X. Xxxxx for the promissory note payable to the Company by
Xxxxxx X. Xxxxx, in amounts equal to double the principal amount
of such promissory notes. Upon expiration on August 7, 1997 of
that certain lock-up agreement with respect to such shares of
capital stock, Investor will take all such action as is necessary
or appropriate to perfect the pledge of such shares of capital
stock as a first priority security interest.
4. California Commissioner of Corporations.
4.1 Corporate Securities Law. THE SALE OF THE SECURI-
TIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN
QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR
RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS
EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS
AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING
OBTAINED, UNLESS THE SALE IS SO EXEMPT.
5. Conditions of Investor's Obligations at Closing.
The obligations of Investor under this Agreement are subject to
the fulfillment on or before each Closing of each of the
following conditions, the waiver of which shall not be effective
unless Investor consents in writing thereto:
5.1 Representations and Warranties. The representa-
tions and warranties of the Company contained in Section 2 shall
be true on and as of each Closing with the same effect as though
such representations and warranties had been made on and as of
the date of such Closing.
5.2 Performance. The Company shall have performed and
complied with all agreements, obligations and conditions
contained in this Agreement that are required to be performed or
complied with by it on or before each Closing.
5.3 Compliance Certificate. The Chief Financial
Officer of the Company shall deliver to Investor at each Closing
a certificate certifying that the conditions specified in
Sections 5.1 and 5.2 have been fulfilled and stating that there
has been no material adverse change in the business, affairs,
prospects, operations, properties, assets or condition of the
Company since December 31, 1996.
5.4 Qualification. All authorizations, approvals, or
permits, if any, of any governmental authority or regulatory body
of the United States or of any state that are required in
connection with the lawful issuance and sale of the Securities to
Investor (i) pursuant to Section 1.1 of this Agreement shall be
duly obtained and effective as of the Initial Closing, and (ii)
pursuant to Section 1.2 of this Agreement shall be duly obtained
and effective as of the NASD Approval Closing.
5.5 Proceedings and Documents. All corporate and
other proceedings in connection with the transactions contem-
plated at each Closing and all documents incident thereto shall
be reasonably satisfactory in form and substance to Investor and
its special counsel, and Investor shall have received all such
counterpart original and certified or other copies of such
documents as it may reasonably request.
6. Conditions of the Company's Obligations at
Closing. The obligations of the Company to Investor under this
Agreement are subject to the fulfillment on or before each
Closing of each of the following conditions by Investor:
6.1 Representations and Warranties. The representa-
tions and warranties of Investor contained in Section 3 hereof
shall be true on and as of each Closing with the same effect as
though such representations and warranties had been made on and
as of such Closing.
6.2 Payment of Purchase Price. Investor shall have
delivered to the Company the purchase price specified in
Section 1.1 on or before the Initial Closing, and shall have
delivered to the Company the purchase price specified in
Section 1.2 on or before the NASD Approval Closing.
6.3 Qualification. All authorizations, approvals, or
permits, if any, of any governmental authority or regulatory body
of the United States or of any state that are required in
connection with the lawful issuance and sale of the Securities to
Investor (i) pursuant to Section 1.1 of this Agreement shall be
duly obtained and effective as of the Initial Closing, and (ii)
pursuant to Section 1.2 of this Agreement shall be duly obtained
and effective as of the NASD Approval Closing.
6.4 Stock Pledge Agreement. Investor shall have
executed a Stock Pledge Agreement for the benefit of the Company
in the form attached hereto as Exhibit C.
6.5 Fairness Opinion. The Company shall have received
from its investment banker, Xxxxxxxxxx Securities, an opinion
that the proposed consideration to be received by the Company
from Investor in exchange for the Units is fair to the Company
from a financial point of view, such opinion to be in the form
attached hereto as Exhibit D.
7. Registration Rights. The Company covenants and
agrees as follows:
7.1 Certain Additional Definitions.
As used in this Agreement, the following capitalized
terms shall have the following meanings:
"Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering
of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such
prospectus.
"Register," "registered" and "registration" refer to a
registration effected by preparing and filing with the SEC a
registration statement or similar document in compliance with the
Securities Act, and such registration statement or document
becoming effective under the Securities Act.
"Registrable Securities" shall mean (i) the Shares,
(ii) the shares of Common Stock issued pursuant to that certain
Unit Purchase Agreement of even date herewith between the Company
and Xxxxxx X. Xxxxx, and (iii) any Common Stock issued as a
dividend or other distribution with respect to or in exchange for
or in replacement of the shares referenced in (i) and (ii) above,
provided, however, that Registrable Securities shall not include
any shares of Common Stock which have previously been registered
or which have been sold in a public offering.
"Registration Statement" shall mean any registration
statement of the Company that covers any of the Registrable
Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all
exhibits and all material incorporated by reference in such
Registration Statement.
7.2 Registration. If after one year following the
Initial Closing, but no later than five years following the
Initial Closing, Investor requests in writing that the Company
file a Registration Statement for a public offering of the
Registerable Securities (a "Demand Request"), the Company will
use its reasonable best efforts to effect a registration to
permit the sale of such Registrable Securities as described
below, and pursuant thereto the Company will:
(a) within ten (10) days of the
Company's receipt of a Demand Request, give written notice of
such request to all holders of Registerable Securities
("Holders");
(b) prepare and file with the SEC
within sixty (60) days of the Company's receipt of a Demand
Request, and use its reasonable best efforts to have declared
effective by the SEC, a Registration Statement on any appropriate
form under the Securities Act as may then be available to the
Company relating to resale of all of the Registrable Securities
which the Holders request to be registered within twenty (20)
days of the mailing of the notice required under Section 7.2(a)
and use its reasonable best efforts to cause such Registration
Statement to remain continuously effective for a period of one
year or such shorter period which will terminate when all
Registrable Securities covered by such Registration Statement
have been sold; provided that a registration will not count as
the permitted demand registration until the Registration
Statement becomes effective and remains effective for the period
specified herein, so long as such registration is not withdrawn
at the request of the holder;
(c) prepare and file with the SEC such
amendments, supplements and post-effective amendments to the
Registration Statement and the Prospectus as may be necessary to
keep such Registration Statement effective for the period
specified in Section 7.2(b) and to comply with the provisions of
the Securities Act and the Exchange Act with respect to the
distribution of all Registrable Securities during such period;
(d) notify the Investor promptly, and
confirm such notice in writing, (i) when the Prospectus or any
supplement or post-effective amendment has been filed and, with
respect to the Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any
request by the SEC for amendments or supplements to the
Registration Statement or Prospectus or for additional
information, (iii) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, (iv) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of the Registrable Securities for
sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, and (v) when a Prospectus or a
Prospectus supplement is required to be delivered under the
Securities Act upon discovery that the Prospectus, as then in
effect, includes an untrue statement of material fact or omits to
state a material fact necessary to make the statements therein
not misleading in light of the circumstances then existing, which
requires amendment or supplementation of the Registration
Statement or Prospectus;
(e) use its reasonable best efforts to
obtain the withdrawal of any order suspending the effectiveness
of the Registration Statement at the earliest possible moment;
(f) deliver to the Investor without
charge as many copies of the Prospectus (including each
preliminary Prospectus) and any amendment or supplement thereto
as Investor may reasonably request in order to facilitate the
disposition of the Registrable Securities in compliance with the
Securities Act;
(g) cause all Registrable Securities
covered by the Registration Statement to be listed on each
securities exchange or market on which shares of the Common Stock
are then listed, and if shares of the Common Stock are not so
listed, use its reasonable best efforts promptly to cause all
such Registerable Securities to be listed on either the New York
Stock Exchange, the American Stock Exchange or the Nasdaq Stock
Market;
(h) use its reasonable best efforts to
qualify or register the Registrable Securities for sale under (or
obtain exemptions from the application of) the Blue Sky laws of
such jurisdictions as are reasonably requested by Investor. The
Company shall not be required to qualify as a foreign corporation
or to file a general consent to service of process in any such
jurisdiction where it is not presently qualified or where it
would be subject to general service of process or taxation as a
foreign corporation in any jurisdiction where it is not now so
subject;
(i) otherwise use its reasonable best
efforts to comply with all applicable rules and regulations of
the SEC under the Securities Act and the Exchange Act and take
such other actions as may be reasonably necessary to facilitate
the registration of the Registrable Securities hereunder.
Investor shall furnish to the Company such information
regarding the distribution of such securities as the Company may
from time to time reasonably request in writing.
If the Company delivers a certificate in writing to
Investor to the effect that a delay in the sale of Registrable
Securities by Investor under the Registration Statement is
necessary because a sale pursuant to such Registration Statement
in its then current form would reasonably be expected to
constitute a violation of the federal securities laws, then
Investor shall agree not to sell or otherwise transfer such
Registrable Securities for the period of time specified by the
Company in its certificate. In no event shall such delay exceed
ten (10) business days; provided, however, that if, prior to the
expiration of such ten (10) business day period, the Company
delivers a certificate in writing to Investor to the effect that
a further delay in such sale beyond such ten (10) business day
period is necessary because a sale pursuant to such Registration
Statement in its then current form would reasonably be expected
to constitute a violation of the federal securities laws, the
Company may refuse to permit Investor to resell any Registrable
Securities pursuant to such Registration Statement for one
additional period not to exceed five (5) business days.
7.3 Registration Expenses. All expenses incident to
the Company's performance of or compliance with this Agreement,
including without limitation all registration and filing fees,
fees with respect to the filings required to be made with the
NASD, fees and expenses of compliance with the securities or Blue
Sky laws, printing expenses, messenger, telephone and delivery
expenses, fees and disbursements of counsel for the Company, fees
and disbursements of all independent certified public accountants
of the Company, fees and expenses incurred in connection with the
listing of the securities, rating agency fees and the fees and
expenses of any person, including special experts, retained by
the Company, will be borne by the Company, regardless of whether
the Registration Statement becomes effective; provided, however,
that the Company will not be required to pay discounts,
commissions or fees of underwriters, selling brokers, dealer
managers or similar securities industry professionals relating to
the distribution of the Registrable Securities or fees or
disbursements of any counsel to Investor.
7.4 Underwritten Registrations; Selection of
Underwriter. If Investor so elects, the offering of Registerable
Securities shall be in the form of an underwritten offering and
the Company shall have the exclusive right to designate the
managing underwriter or underwriters with respect to the related
offering of the Registerable Securities, which underwriter or
underwriters must be reasonably acceptable to the Investor.
7.5 Rule 144. The Company covenants that it will file
the reports required to be filed by it under the Securities Act
and the Exchange Act and it will take such further action as
Investor may reasonably request, all to the extent required to
enable Investor to sell Registrable Securities without
registration under the Securities Act in reliance on the
exemption provided by Rule 144 or Rule 144A or any successor or
similar rules or statues. Upon the request of Investor, the
Company will deliver to Investor a written statement as to
whether the Company has complied with such information and
requirements.
7.6 Transfer or Assignment of Registration Rights.
The rights to cause the Company to register Securities and all
related rights granted to Investor by the Company under this
Section 7 may be transferred or assigned by Investor only to a
transferee or assignee of not less than 100,000 shares of
Registrable Securities (as presently constituted and subject to
subsequent adjustments for stock splits, stock dividends, reverse
stock splits, and the like), provided that the Company is given
written notice at the time of or within a reasonable time after
such transfer or assignment, stating the name and address of the
transferee or assignee and identifying the Securities with
respect to which such registration rights are being transferred
or assigned, and, provided further, that the transferee or
assignee of such rights assumes the obligations of Investor under
this Section 7.
7.7 "Market Stand-Off" Agreement. If requested by the
Company and an underwriter of Common Stock (or other securities)
of the Company, Investor shall not sell or otherwise transfer or
dispose of any Common Stock (or other securities) of the Company
held by Investor (other than those included in the registration)
during the one hundred twenty (120) day period following the
effective date of a registration statement of the Company filed
under the Securities Act.
The obligations described in this Section 7.7 shall not
apply to a registration relating solely to employee benefit plans
on Form S-1 or Form S-8 or similar forms that may be promulgated
in the future, or a registration relating solely to a Rule 145
transaction on Form S-4 or similar forms that may be promulgated
in the future. The Company may impose stop-transfer instructions
with respect to the Securities subject to the foregoing
restriction until the end of such one hundred twenty (120) day
period.
Each time the Company invokes its Market Stand-off
rights under this Section 7.7 while Investor is entitled to make
a Demand Request, the period during which Investor shall be
entitled to make a Demand Request under Section 7.2 hereof shall
be extended by an additional one hundred twenty (120) days;
provided, however, that Investor's Demand Request period will not
be extended following the first Market Stand-Off unless such
Market Stand-Off occurs within one hundred twenty (120) days of
the expiration of Investor's Demand Request period.
7.8 Indemnification. In the event any Registrable
Securities are included in a Registration Statement under this
Section 7:
(a) To the extent permitted by law, the
Company will indemnify and hold harmless the Investor, any person
or entity to or through whom Investor sells Registerable
Securities that may be deemed to be an underwriter (as defined in
the Securities Act), any officer, director, partner or agent
thereof, and each person, if any, who controls the Investor or
underwriter within the meaning of the Securities Act or the
Exchange Act against any and all losses, claims, damages, or
liabilities (joint or several) to which they may become subject
under the Securities Act, the Exchange Act or other United States
federal or state securities law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out
of or are based upon any of the following statements, omissions
or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact
contained in any related registration statement, including any
preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto or offering circular or in
any application or other document or communication executed by or
on behalf of the Company relating to such registration (together,
"Selling Documents"), (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii)
any violation or alleged violation by the Company of the
Securities Act, the Exchange Act or other United States federal
or state securities law, or any rule or regulation promulgated
under the Securities Act, the Exchange Act or other United States
federal or state securities law; and the Company will pay to the
Investor, underwriter or controlling person any legal or other
expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability, or action as incurred; provided, however, that the
indemnity agreement contained in this subsection 7.8(a) shall not
apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected
without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable in any
such case for any such loss, claim, damage, liability, or action
to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by the Investor, underwriter or controlling person.
(b) To the extent permitted by law, the
Investor will indemnify and hold harmless the Company, each of
its directors, each of its officers who has signed a Selling
Document, each person, if any, who controls the Company within
the meaning of the Securities Act, any underwriter, any officer,
director, partner or agent thereof and any controlling person of
any such underwriter, against any losses, claims, damages, or
liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Securities Act, the
Exchange Act or other United States federal or state securities
law insofar as such losses, claims, damages, or liabilities (or
actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity
with written information furnished by the Investor expressly for
use in connection with such registration; and the Investor will
pay any legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this subsection 7.8(b), in
connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 7.8(b) shall not
apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected
without the consent of the Investor, which consent shall not be
unreasonably withheld; provided further, that in no event shall
any indemnity under this subsection 7.8(b) exceed the proceeds
(net of underwriting discounts and commissions) from the related
offering of the Registerable Securities received by the Investor.
(c) After receipt by an indemnified
party under this Section 7.8 of notice of the commencement of any
action (including any governmental action) involving a claim
referred to in Sections 7.8(a) or 7.8(b) hereof, such indemnified
party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 7.8, deliver to the
indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate
in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party (together
with all other indemnified parties which may be represented
without conflict by one counsel) shall have the right to retain
one separate counsel, with the fees and expenses to be paid by
the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests
between such indemnified party and any other party represented by
such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 7.8, but
the omission so to deliver written notice to the indemnifying
party will not relieve it of any liability that it may have to
any indemnified party otherwise than under this Section 7.8.
(d) If the indemnification provided for
in this Section 7.8 is held by a court of competent jurisdiction
to be unavailable to an indemnified party with respect to any
loss, liability, claim, damage, or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid
or payable by such indemnified party as a result of such loss,
liability, claim, damage, or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in
such loss, liability, claim, damage, or expense as well as any
other relevant equitable considerations; provided, however, that
in any such case, (A) the Investor will not be required to
contribute any amount in excess of the proceeds (net of
underwriting discounts and commissions) received by the Investor
from all Registrable Securities offered and sold by the Investor
pursuant to the applicable Selling Document; and (B) no person or
entity guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such
fraudulent misrepresentation. The relative fault of the
indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the
Violation relates to information supplied by the indemnifying
party or by the indemnified party and the parties' relative
intent, knowledge, access to information, and opportunity to
correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to
the extent that the provisions on indemnification and
contribution contained in any underwriting agreement entered into
by the Company in connection with an underwritten public offering
are in conflict with the foregoing provisions, the provisions in
the underwriting agreement shall control, provided that Investor
is a signatory to the underwriting agreement.
(f) The obligations of the Company and
the Investor under this Section 7.8 shall survive the completion
of any offering of Registrable Securities in a Registration
Statement under this Section 7 and otherwise.
8. Miscellaneous.
8.1 Survival of Warranties. The representations and
warranties of the Company contained in or made pursuant to this
Agreement shall survive the execution and delivery of this
Agreement and each Closing and shall in no way be affected by any
investigation of the subject matter thereof made by or on behalf
of Investor or the Company.
8.2 Successors and Assigns. Except as otherwise
provided in this Agreement, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties. Nothing in
this Agreement, express or implied, is intended to confer upon
any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
8.3 Governing Law. This Agreement shall be governed
by and interpreted in accordance with the laws of the State of
Delaware, except as they may be preempted by federal law. In any
action brought or arising out of this Agreement, Investor and the
Company hereby consent to the jurisdiction of any federal or
state court having proper venue within the State of California
and also consent to the service of process by any means
authorized by California or federal law.
8.4 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an origi-
nal, but all of which together shall constitute one and the same
instrument.
8.5 Titles and Subtitles. The titles and subtitles
used in this Agreement are used for convenience only and are not
to be considered in construing or interpreting this Agreement.
8.6 Notices. Unless otherwise provided, any notice
required or permitted under this Agreement shall be given in
writing and shall be deemed effectively given upon personal
delivery to the party to be notified (or upon the date of
attempted delivery where delivery is refused) or, if sent by
telecopier, telex, telegram, or other facsimile means, upon
receipt of appropriate confirmation of receipt, or five (5) days
after deposit with the United States Postal Service, by
registered or certified mail, or one (1) day after deposit with
next day air courier, with postage and fees prepaid and addressed
to the party entitled to such notice at the address indicated for
such party on the signature page hereof, or at such other address
as such party may designate by ten (10) days advance written
notice to the other parties to this Agreement.
8.7 Expenses. Except as otherwise specified in this
Agreement, irrespective of whether the Initial Closing or the
NASD Approval Closing is effected, each party hereto shall pay
all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this
Agreement. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which
such party may be entitled.
8.8 Amendments and Waivers. Except as otherwise
specified in this Agreement, any term of this Agreement may be
amended and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of
the Company and Investor. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder
of any Securities purchased under this Agreement at the time
outstanding (including securities into which such Securities are
convertible), each future holder of all such Securities, and the
Company.
8.9 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such
provision shall be excluded from this Agreement and the balance
of this Agreement shall be interpreted as if such provision were
so excluded and shall be enforceable in accordance with its
terms.
8.10 Aggregation of Stock. All shares of Common Stock
held or acquired by affiliated entities or persons shall be
aggregated together for the purpose of determining the
availability of any rights under this Agreement.
8.11 Entire Agreement. This Agreement, the Exhibits
hereto and other documents delivered expressly hereby constitute
the full and entire understanding and agreement, and supersede
all prior agreements and understandings, both written and oral,
between the parties with regard to the subjects hereof and no
party shall be liable or bound to any other in any manner by any
representations, warranties, covenants or agreements except as
specifically set forth herein and therein.
8.12 Press Releases. The Company agrees not to issue
any press release concerning the transactions contemplated by
this Agreement, the terms of which are not reasonably acceptable
to Investor.
8.13 Exchange Act Filings. The Company agrees to
consult with Investor before filing with the SEC any information
required under the Exchange Act concerning the transactions
contemplated by this Agreement and agrees to consider in good
faith all reasonable comments received from Investor in
connection therewith.
[REMAINDER OF THE PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
THE IMMUNE RESPONSE CORPORATION
By ___________________________
Title ________________________
Address: 0000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
INVESTOR
___________________________
Xxxxx X. Xxxxxxxxx
Address: Xxxxxxx Xxxxx, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
