Dated as of August 8, 2002
LETTER AGREEMENT
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The Immune Response Corporation
0000 Xxxxxx Xxxxx
Xxxxxxxx , XX 00000
Attention: Xxxxxxx X. Xxxx
Re: Nasdaq Compliance Restrictions
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Dear Xxxxxxx:
The undersigned, each a security holder and an affiliate of a
director of The Immune Response Corporation, a Delaware corporation (the
"Company"), understand that the Nasdaq National Market ("Nasdaq") has contacted
the Company regarding an alleged violation of National Association of Security
Dealers ("NASD") Rule 4350(i)(1)(A) (the "Insider Rule"), Rule 4350(i)(1)(B)
(the "Change in Control Rule") and Rule 4350(i)(1)(D) (the "20% Rule") in
connection with the sale of Notes and Warrants to the undersigned pursuant to
the Note Purchase Agreement dated as of November 9, 2001, by and between the
Company and the Xxxxx Xxxxxxxxx Partners, L.P., a Delaware limited partnership
("KKP"), as amended by Amendment No. 1 to the Note Purchase Agreement dated as
of February 14, 2002, Amendment No. 2 to the Note Purchase Agreement, dated as
of May 3, 2002, each by and between the Company, KKP and Oshkim Limited
Partnership, a Nevada limited partnership ("Oshkim") and Amendment No. 3 to the
Note Purchase Agreement, dated as of July 11, 2002, by and between the Company,
KKP, Oshkim and The Xxxxxxxxx Family 1998 Irrevocable Trust (the "Agreement").
While neither the Company nor the undersigned believe that the transactions
pursuant to the Agreement violated the Insider Rule, the Change in Control Rule
or the 20% Rule, all parties agree that, as requested by Nasdaq in order to
ensure compliance with the Insider Rule, it is in the best interest of the
Company and the undersigned to agree to certain restrictions with respect to the
Common Stock of the Company underlying the Notes and Warrants issued in May,
June and July, 2002, pursuant to the Agreement.
In recognition of the benefit that continued listing of the
Company's Common Stock on Nasdaq would confer upon the undersigned as security
holders of the Company and to enable the Company and the undersigned to engage
in future financing pursuant to the Agreement, the undersigned and the Company
agree that until either (i) the Company obtains stockholder approval (which
approval the Company shall use its best efforts to obtain by November 30, 2002)
of the transactions for purposes of compliance with the Insider Rule, the Change
in Control Rule and the 20% Rule or (ii) at such time as a proposed merger, sale
of assets or similar transaction, or tender or exchange offer is under
consideration by our Board of Directors, the restrictions will lapse, the
undersigned will not, without the prior written consent of the Company, directly
or indirectly:
(i) vote any shares of the Common Stock issuable upon the conversion
or exercise of the respective Notes and Warrants issued in May, June and July,
2002;
(ii) offer, pledge, sell, or otherwise dispose of or transfer any
shares of the Common Stock issuable upon the conversion or exercise of the
respective Notes and Warrants issued in May, June and July, 2002;
(iii) receive any additional shares of capital sock (or securities
convertible into or exchangeable for capital stock) issuable by the Company via
a stock dividend or stock distribution paid with respect to its Common Stock
("Dividends") issuable upon the conversion or exercise of the respective Notes
and Warrants issued in May, June and July, 2002;
(iv) convert or exercise any of the respective Notes and Warrants
issued in May, June and July, 2002.
Notwithstanding subsection (ii), the undersigned may transfer or
assign shares of the Common Stock issuable upon the conversion or exercise of
the respective Notes and Warrants issued pursuant to the Agreement (i) as a bona
fide gift or gifts, provided that the donee or donees thereof enter into a
Letter Agreement on terms identical to the terms of this Letter Agreement, or
(ii) to any trust for the direct or indirect benefit of the undersigned,
provided that the trustee of the trust enter into a Letter Agreement on terms
identical to the terms of this Letter Agreement, and provided further that any
such transfer shall not involve a disposition for value. In addition,
notwithstanding the foregoing, the undersigned may transfer or assign the
capital stock of the Company to any partner of the undersigned or affiliate of
such partner; provided, however, that in any such case, it shall be a condition
to the transfer or assignment that the transferee or assignee enter into a
Letter Agreement on terms identical to the terms of this Letter Agreement and
there shall be no further transfer of such capital stock except in accordance
with this Letter Agreement, and provided further that any such transfer shall
not involve a disposition for value. The undersigned also agrees and consents to
the entry of stop transfer instructions with the Company's transfer agent and
registrar against the transfer of the undersigned's securities except in
compliance with the foregoing restrictions.
Notwithstanding subsection (iii), any Dividends which the
undersigned would have the right to receive shall be held in escrow for the
undersigned by the Chief Financial Officer of the Company until obtaining
stockholder approval for the transaction for purposes of compliance with the
Insider Rule, the Change in Control Rule or the 20% Rule.
Very truly yours,
OSHKIM LIMITED PARTNERSHIP
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By:
Its:
THE XXXXXXXXX FAMILY 1998
IRREVOCABLE TRUST
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By:
Its:
Agreed and accepted:
THE IMMUNE RESPONSE CORPORATION
___________________________________________________
Xxxxxxx X. Xxxx
Vice President, Finance and Chief Financial Officer
