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 Xxxxxx 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.
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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.
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(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
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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
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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 XXXXX 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
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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
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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
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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.
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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, 0000 Xxxxxx Xxxxx, Xxxxxxxx,
Xxxxxxxxxx, 00000; 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.
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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/ Xxxxxx X. X'Xxxxx
----------------------------------
Xxxxxx X. X'Xxxxx, CEO & President
ATTEST:
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------
Xxxxxxx X. Xxxxx, Secretary
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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:________________________
________________________________
