INTERCREDITOR AGREEMENT
Exhibit 10.194
AGREEMENT, made this 9th day of February, 2006, by and among The Immune Response Corporation,
a Delaware corporation (the “Company”), Cheshire Associates, LLC, a Delaware limited liability
company (“Cheshire”), Cornell Capital Partners, L.P., a Delaware limited partnership (“Cornell”),
and Xxxxxx Asset Partners, LLC, a Delaware limited liability company (the “Agent”), as agent for
the holders from time to time of the Company’s 8% Senior Secured Convertible Notes and for Qubit
Holdings, LLC (“Qubit”) in respect of the 8% senior secured convertible promissory note in the
principal amount of $250,000 issued by the Company to Qubit on the same date hereof (the “Qubit
Note”). Cheshire, Cornell and the Agent shall each be referred to herein as a “Secured Party” and
shall collectively be referred to as the “Secured Parties”.
W I T N E S S E T H:
WHEREAS, Cheshire has made a loan in the aggregate principal amount of $5,740,928 to
the Company which came to be evidenced by a 8% Convertible Secured Promissory Note, effective April
29, 2005 (the “Cheshire Note”) pursuant to certain agreements by and between the Company and
Cheshire and Cheshire’s assignors (together with the Cheshire Note the “Cheshire Agreements”); and
WHEREAS, Cornell has made a loan in the original principal amount of $1,000,000 to the Company
pursuant to a Secured Convertible Debenture bearing interest at 12% per annum, effective August 4,
2005 (the “Cornell Debenture”) and a Securities Purchase Agreement of even date therewith, by and
between the Company and Cornell (together with the Cornell Debenture the “Cornell Agreements”); and
WHEREAS, the Company, pursuant to the terms of a certain Confidential Private Placement
Memorandum (the “Memorandum”), will, from time to time, issue to certain investors (the
“Investors”), 8% Senior Secured Convertible Promissory Notes (the “Investor Notes”), in the
principal amount of up to Five Million Dollars ($5,000,000); and
WHEREAS, the Company has issued the Qubit Note to Qubit (except where the context forbids,
Qubit shall be considered an “Investor” hereunder and the Qubit Note shall be deemed to be an
“Investor Note”); and
WHEREAS, the Company, pursuant to the Investor Notes and a Security Agreement of even date
herewith, by and between the Company and the Agent (the “Security Agreement”), will grant to the
Investors a security interest in all of the assets of the Company (together with the collateral
securing the Cheshire Note and the Cornell Debenture, the “Collateral”); and
WHEREAS, Cheshire and Cornell each hereby consent to the grant by the Company of the security
interests of the Investors and agree that such security interests shall not constitute a default or
Event of Default under the Cheshire Agreements or the Cornell Agreements.
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NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Company and the Secured Parties
hereby agree with each other as follows:
1. Company’s Title; Liens and Encumbrances. The Company represents and warrants that
it is the owner of its Collateral, having good and marketable title thereto, free from any and all
liens, security interests, encumbrances and claims. The Company will not create or assume or
permit to exist any lien, security interest, encumbrance or claim on or against the Collateral that
is senior to the Cheshire Note, the Cornell Debenture or the Investor Notes (collectively, the
“Notes”) except as created by this Agreement and as permitted by the Notes, and the Company will
promptly notify the Secured Parties of any such other claim, lien, security interest or other
encumbrance made or asserted against the Collateral and will defend the Collateral against any such
claim, lien, security interest or other encumbrance.
2. Location of Collateral and Records. The Company represents and warrants that it
has no place of business, offices where the Company’s books of account and records are kept, or
places where the Collateral is used, stored or located, except as set forth on Schedule I annexed
hereto. The Company shall at all times maintain its records as to the Collateral at its chief
place of business at the address referred to on Schedule I and at none other. The Company further
covenants that except for Collateral delivered to the Secured Parties, the Company will not store,
use or locate any of the Collateral at any place other than as listed on Schedule I hereto.
3. Perfection of Security Interest. The Company will join with the Secured Parties in
executing one or more financing statements or amendments to existing financing statements, as
necessary, pursuant to the Uniform Commercial Code or other notices appropriate under applicable
law in form satisfactory to each of the Secured Parties and will pay all filing or recordings costs
with respect thereto, and all costs of filing or recording this Agreement or any other instrument,
agreement or document executed and delivered pursuant hereto or to the Notes (including the costs
of all Federal, state or local mortgage, documentary, stamp or other taxes), in each case, in all
public offices where filing or recording is deemed by the Secured Party to be necessary or
desirable. The Company hereby authorizes each Secured Party to take all action (including, without
limitation, the filing of any Uniform Commercial Code Financing Statements or amendments thereto
without the signature of the Company) which such Secured Party may deem necessary or desirable to
perfect or otherwise protect the liens and security interests created hereunder and to obtain the
benefits of this Agreement.
4. General Covenants. The Company shall:
a. furnish to each Secured Party from time to time, at each Secured Party’s request, written
statements and schedules further identifying and describing the Collateral in such detail as the
Secured Party may reasonably require;
b. advise each Secured Party promptly, in sufficient detail, of any substantial change in the
Collateral, and of the occurrence of any event which would have an adverse effect on the value of
the Collateral or on such Secured Party’s security interest therein;
c. comply with all acts, rules, regulations and orders of any legislative, administrative or
judicial body or official applicable to the Collateral or any part thereof or to the
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operation of the Company’s business; provided, that the Company may contest any acts,
rules, regulations, orders and directions of such bodies or officials in any reasonable manner
which will not, in each Secured Party’s opinion, adversely affect their rights or the priority of
their security interest in the Collateral;
d. perform and observe all covenants, restrictions and conditions contained in the Notes,
including, without limitation, those providing for payment of taxes, maintenance of insurance and
otherwise relating to the Collateral, as though all such covenants, restrictions and conditions
were fully set forth in this Agreement; and
e. promptly execute and deliver to the Secured Parties such further deeds, mortgages,
assignments, security agreements, financing statements or other instruments, documents,
certificates and assurances and take such further action as the Secured Parties may, from time to
time, in their discretion, deem necessary to perfect, protect or enforce its security interest in
the Collateral or otherwise to effectuate the intent of this Agreement and the Notes including,
without limitation, appropriate documents and instruments to grant the Secured Parties a first lien
and security interest in any and all assets of any subsidiaries formed or acquired subsequent to
the date hereof.
5. Fixtures. It is the intent of the Company and the Secured Parties that none of the
Collateral is or shall be fixtures, as that term is used or defined in Article 9 of the Uniform
Commercial Code, and the Company represents and warrants that it has not made and is not bound by
any lease or other agreement which is inconsistent with such intent. Nevertheless, if the
Collateral or any part thereof is or is to become attached or affixed to any real estate, the
Company will, upon request by the Secured Parties, use its best efforts to cause all persons having
an interest in the real estate to which the Collateral is attached or affixed to furnish the
Secured Parties with a disclaimer or subordination, in form satisfactory to the Secured Parties, of
its interest in the Collateral, and the Company, upon request by the Secured Parties, will furnish
the Secured Parties with the names and addresses of the record owners of, and all other persons
having interest in, and a general description of, such real estate.
6. Collections. From and after the date of any event of default under any of the
Notes, the Company will immediately upon receipt of all checks, drafts, cash or other remittances
in payment of any of its accounts, contract rights or general intangibles constituting part of the
Collateral, or in payment for any Collateral sold, transferred, leased or otherwise disposed of, or
in payment or on account of its accounts, contracts, contract rights, notes, drafts, acceptances,
general intangibles, choses in action and all other forms of obligations relating to any of the
Collateral so sold, transferred or otherwise disposed of, deliver any such items to the Secured
Parties accompanied by a remittance report in form supplied or approved by the Secured Parties,
such items to be delivered to the Secured Parties in the same form received, endorsed or otherwise
assigned by the Company where necessary to permit collection of items and, regardless of the form
of such endorsement, the Company hereby waives presentment, demand, notice of dishonor, protest,
notice of protest and all other notices with respect thereto. All such remittances shall be
applied and credited by the Secured Parties first to satisfaction of the obligations of every kind,
nature and description owing by the Company to the Secured Parties, including, without limitation,
principal, interest, costs and expenses, however evidenced, as arising under the Investor Notes,
the Security Agreement, the Cheshire Agreements and the Cornell Agreements (collectively, the
“Obligations”) pursuant to paragraph 8 below, or as otherwise required by applicable law, and to
the extent not so credited or applied, shall be paid
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over to the Company.
7. Rights and Remedies on Default. In the event of the occurrence of any event of
default as defined or specified in the Investors Notes, the Security Agreement, the Cheshire
Agreements, or the Cornell Agreements, the Secured Parties shall at any time thereafter have the
right, with or without notice to the Company, as to any or all of the Collateral, by any available
judicial procedure, or without judicial process, to take possession of the Collateral and without
liability for trespass to enter any premises where the Collateral may be located for the purpose of
taking possession of or removing the Collateral, and, generally, to exercise any and all rights
afforded to a secured party under the Uniform Commercial Code or other applicable law. Without
limiting the generality of the foregoing, upon any event of default, the Company agrees that the
Secured Parties shall have the right to sell, borrow against, lease, or otherwise dispose of all or
any part of the Collateral, upon ten (10) days prior written notice, whether in its then condition
or after further preparation or processing, either at public or private sale or at any broker’s
board, in lots or in bulk, for cash or for credit, with or without warranties or representations,
and upon such terms and conditions, all as the Secured Parties in their unanimous sole discretion
may deem advisable, and it shall have the right to purchase at any such sale; and, if any
Collateral shall require rebuilding, repairing, maintenance, preparation, or is in process or other
unfinished state, the Secured Parties shall have the right, at their option to do such rebuilding,
repairing, preparation, processing or completion of manufacturing, for the purpose of putting the
Collateral in such saleable or disposable form as it shall deem appropriate. At the Secured
Parties’ request, the Company shall assemble the Collateral and make it available to the Secured
Parties at places which the Secured Parties shall select, whether at the Company’s premises or
elsewhere, and make available to the Secured Parties, without rent, the Company’s premises and
facilities for the purpose of the Secured Parties taking possession of, collecting, removing or
putting the Collateral in saleable or disposable form. The proceeds of any such sale, lease or
other disposition of the Collateral shall be applied first, to the expenses of retaking, holding,
storing, processing and preparing for sale, selling, and the like and to the reasonable attorneys’
fees, collection fees and legal expenses incurred by the Secured Parties, and then to satisfaction
of the Obligations (subject to paragraph 8 below), and to the payment of any other amounts required
by applicable law, after which the Secured Parties shall account to the Company for any surplus
proceeds. If, upon the sale, lease or other disposition of the Collateral, the proceeds thereof
are insufficient to pay all amounts to which the Secured Parties are legally entitled, the Company
will be liable for the deficiency, together with interest thereon, and the reasonable fees of any
attorneys or agents employed by the Secured Parties to collect such deficiency. To the extent
permitted by applicable law, the Company waives all claims, damages and demands against the Secured
Parties arising out of the repossession, removal, retention or sale of the Collateral. Any event
of default as to any Note shall be deemed an event of default as to all other Notes.
Notwithstanding the above, no Secured Party will exercise any rights under this Section 7 on its
own behalf or on the behalf of all Secured Parties unless all Secured Parties have agreed in
writing to such actions.
8. Intercreditor Relationship.
a. The Secured Parties agree that notwithstanding applicable law, the Secured Parties’
relative priorities as to the Collateral shall be on a pari passu basis based on all amounts
outstanding under the respective Notes.
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b. Until all the Obligations under the Notes are fully paid, any payments of any Obligations
to the Secured Parties under the Notes with respect to the Collateral shall be made on a pari passu
basis based on all amounts outstanding under the respective Notes; provided, that unless
and until an event of default under any of the Notes shall occur, all scheduled payments of
principal and/or interest can be made on each Note without any requirement for pari passu payments
on the other Notes. However, in the event that a dispute exists between the Secured Parties or a
question is raised by the Company with regard to the payment of any Obligations, the Company shall
retain such amounts in escrow until instructed upon the appropriate distribution of the amounts by
either: (1) a writing signed by all Secured Parties; or (2) a valid court order rendered by a court
of competent jurisdiction.
c. This Agreement and the terms and provisions hereof are solely for the benefit of the
Company, Cheshire, Cornell and the Investors, and their respective successors and assigns and shall
not benefit any person not specifically a party to this Agreement. Nothing in this Agreement is
intended to affect, limit, or in any way diminish the security interest, mortgage liens or other
liens which Cheshire or Cornell claim in the Collateral insofar as the rights of the Company and
third parties are concerned. The Secured Parties specifically reserve any and all of their
respective rights, security interests, mortgage liens or other liens and right to assert security
interest, mortgage liens or other liens against the Company and any third parties, including
guarantors. The Company acknowledges and consents to all of the terms of this Agreement.
d. Should any Secured Party receive any money relating to the Obligations in excess of the
amounts such Secured Party is entitled to under subparagraphs 8.a and 8.b above, it will (unless
otherwise restricted by law) hold the same in trust for the other Secured Parties and promptly pay
over the same to the other Secured Parties pursuant to paragraph 8; any excess shall be paid over
to the Company.
e. Each Secured Party to this Agreement hereby waives any right to require any other party to
xxxxxxxx any Collateral or otherwise to compel any other party to seek recourse against or
satisfaction of the Obligations owed to it from one source before seeking recourse or satisfaction
from another source.
f. This Agreement is entered into solely for the purposes set forth in the Recitals above,
and, except as is expressly provided otherwise herein, no party to this Agreement assumes any
responsibility to the other party to advise such other party of information regarding the financial
condition of the Company or regarding any Collateral or of any other circumstances bearing upon the
risk of non-payment of the Obligations of any or all of the Company to the Secured Parties. Each
Secured Party shall be responsible for managing its relationship with the Company, and no party
shall be deemed the agent of any other party for any purpose. Each of the Secured Parties hereto
may alter, amend, supplement, release, discharge or otherwise modify any terms of the documents
evidencing and embodying its loans with the Company without notice to or consent of the other
party.
g. Cheshire and Cornell each hereby consent to the grant of the security interest to the
Investors.
9. Costs and Expenses. Any and all fees, costs and expenses, of whatever kind or
nature, including the reasonable attorneys’ fees and legal expenses incurred by each Secured Party,
in connection with the filing or recording of financing statements and other documents
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(including all taxes in connection therewith) in public offices, the payment or discharge of
any taxes, insurance premiums, encumbrances or otherwise protecting, maintaining or preserving the
Collateral, or the enforcing, foreclosing, collecting, retaking, holding, storing, processing,
selling or otherwise realizing upon the Collateral and each Secured Party’s security interest
therein, whether through judicial proceedings or otherwise, or in defending or prosecuting any
actions or proceedings arising out of or related to the transaction to which this Agreement
relates, shall be borne and paid by the Company on demand by such Secured Party and until so paid
shall be added to the principal amount of the Obligations and shall bear interest at the applicable
interest rate prescribed in the Notes in the event of default.
10. Power of Attorney. In the event of the occurrence of an event of default under
the Notes, the Cheshire Agreements, the Cornell Agreements or the Security Agreement, the Company
hereby authorizes the Secured Parties and does hereby make, constitute and appoint the Secured
Parties, and any officer or agent of the Secured Parties with full power of substitution, as the
Company’s true and lawful attorney-in-fact, with power, in its own name or in the name of the
Company, to endorse any notes, checks, drafts, money orders, or other instruments of payment
(including payments payable under or in respect of any policy of insurance) in respect of the
Collateral that may come into possession of the Secured Parties; to sign and endorse any invoice,
freight or express xxxx, xxxx of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with accounts, and other documents relating to
Collateral; to pay or discharge taxes, liens, security interests or other encumbrances at any time
levied or placed on or threatened against the Collateral; to demand, collect, receipt for,
compromise, settle and xxx for monies due in respect of the Collateral; and, generally, to do, at
the Secured Parties’ option and at the Company’s expense, at any time, or from time to time, all
acts and things which the Secured Parties deem reasonably necessary to protect, preserve and
realize upon the Collateral and the Secured Party’s security interest therein in order to effect
the intent of this Agreement, the Cheshire Agreements, the Cornell Agreement, the Security
Agreement and the Notes as fully and effectually as the Company might or could do; and the Company
hereby ratifies all that said attorney shall lawfully do or cause to be done by virtue hereof.
This power of attorney shall be irrevocable for the term of this Agreement and thereafter as long
as any of the Obligations shall be outstanding.
11. Notices. Any notices required or permitted to be sent hereunder shall be
delivered personally or by an overnight courier service or mailed via certified mail, return
receipt requested, to a party at the address set forth under its name on the signature page thereto
or such other address as any party hereto designates by written notice to the other, and shall be
deemed to have been given upon delivery, if delivered personally or by overnight courier service,
with receipt acknowledged or three business days after mailing, if mailed in accordance with the
foregoing provisions.
12. Other Security. To the extent that the Obligations are now or hereafter secured
by property other than the Collateral or by the guarantee, endorsement or property of any other
person, firm, corporation or other entity, then the Secured Parties shall have the right, in their
unanimous sole discretion to pursue, relinquish, subordinate, modify or take any other action with
respect thereto, without in any way modifying or affecting any of the Secured Parties’ rights and
remedies hereunder.
13. Miscellaneous.
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a. Beyond the safe custody thereof, no Secured Party shall have a duty as to the collection of
any Collateral in its possession or control or in the possession or control of any agent or nominee
of any Secured Party, or any income thereon or as to the preservation of rights against prior
parties or any other rights pertaining thereto.
b. No course of dealing between the Company and any Secured Party, nor any failure to
exercise, nor any delay in exercising, on the part of any Secured Party, any right, power or
privilege hereunder or under the Notes shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
c. Each Secured Party’s rights and remedies with respect to the Collateral, whether
established hereby or by a Note or Notes, or by any other agreements, instruments or documents or
by law shall be cumulative and may be exercised singly or concurrently.
d. The provisions of this Agreement are severable, and if any clause or provision shall be
held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction
and shall not in any manner affect such clause or provision in any other jurisdiction, or any other
clause or provision of this Agreement in any jurisdiction.
e. This Agreement is subject to modification only by a writing signed by the parties.
f. The benefits and burdens of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parities; provided however, that the rights and
obligations of the Company under this Agreement shall not be assigned or delegated without the
prior written consent of each Secured Party, and any purported assignment or delegation without
such consent shall be void.
14. Term of Agreement. The term of this Agreement shall commence on the date hereof
and this Agreement shall continue in full force and effect, and be binding upon the Company, until
all of the Obligations have been fully paid and performed and such payment and performance has been
acknowledged in writing by each of the parties hereto, whereupon this Agreement shall terminate.
15. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Agreement
shall be governed by, and construed in accordance with, the internal laws of the State of New York
without regard to the choice of law principles thereof. Each of the parties hereto irrevocably
submits to the exclusive jurisdiction of the courts of the State of New York located in New York
County and the United States District Court for the Southern District of New York for the purpose
of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the
transactions contemplated hereby. Service of process in connection with any such suit, action or
proceeding may be served on each party hereto anywhere in the world by the same methods as are
specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably
consents to the jurisdiction of any such court in any such suit, action or proceeding and to the
laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of
venue of any such suit, action or proceeding brought in such courts and irrevocably waives any
claim that any such suit, action or proceeding brought in any such court
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has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO
REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT
COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have caused these presents to be duly executed and delivered
the day and year first above written.
| Secured Parties: | ||||
| CHESHIRE ASSOCIATES, LLC | ||||
| By: | ||||
| Nonmember Manager | ||||
| Notice Address: | ||||
| 000 Xxxxxxx Xxxxxx, 00xx Xxxxx | ||||
| Xxx Xxxx, XX 00000 | ||||
| Facsimile: (000) 000-0000 | ||||
| CORNELL CAPITAL PARTNERS, L.P. | ||||
| By: Yorkville Advisors, LLC | ||||
| Its: General Partner | ||||
| By: | ||||
| Name: Xxxx Xxxxxx | ||||
| Title: Portfolio Manager | ||||
| Notice Address: | ||||
| 000 Xxxxxx Xxxxxx, Xxxxx 0000 | ||||
| Xxxxxx Xxxx, XX 00000 | ||||
| Attention: Xxxx X. Xxxxxx | ||||
| Facsimile: (000) 000-0000 | ||||
| With a copy to: | ||||
| Xxxxx Xxxxxxxx, Esq. | ||||
| 000 Xxxxxx Xxxxxx, Xxxxx 0000 | ||||
| Xxxxxx Xxxx, XX 00000 | ||||
| Facsimile: (000) 000-0000 | ||||
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| XXXXXX ASSET PARTNERS, LLC, | ||||
| as Agent for the Investors | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| Notice Address: | ||||
| Xxxxxx Asset Partners, LLC | ||||
| c/x Xxxxxxxx Holding Corp. | ||||
| 1114 Avenue of the Xxxxxxxx, 00xx Xxxxx | ||||
| Xxx Xxxx, Xxx Xxxx 00000 | ||||
| Attention: Xxxx X. Xxxxxxxx | ||||
| Facsimile: | ||||
| With a Copy to: | ||||
| Xxxxxxx Krooks LLP | ||||
| 000 Xxxxx Xxxxxx, 00xx Xxxxx | ||||
| Xxx Xxxx, Xxx Xxxx 00000 | ||||
| Attention: Xxxxxxxx X. Xxxxxxx, Esq. | ||||
| Facsimile: (000) 000-0000 | ||||
| The Company: | ||||
| THE IMMUNE RESPONSE CORPORATION | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| Notice Address: | ||||
| 0000 Xxxxxx Xxxxx | ||||
| Xxxxxxxx, XX 00000 | ||||
| Attention: President | ||||
| Facsimile: (000) 000-0000 | ||||
| With a copy to: | ||||
| Xxxxxx Xxxxxx LLP | ||||
| 0000 Xx Xxxxx Xxxxxxx Xxxxx, 0xx Xxxxx | ||||
| Xxx Xxxxx, XX 00000 | ||||
| Attention: Xxxxxx Xxxxxxx, Esq. | ||||
| Facsimile: (000) 000-0000 | ||||
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SCHEDULE I
CHIEF PLACE OF BUSINESS OF THE COMPANY
AND LOCATION OF COLLATERAL:
AND LOCATION OF COLLATERAL:
0000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Xxxxxxxx, XX 00000
000 Xxxxxxxxx Xxxx
Xxxx xx Xxxxxxx, XX
Xxxx xx Xxxxxxx, XX
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