Exhibit 5
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AMENDMENT NO. 1 TO NOTE PURCHASE AGREEMENT
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This AMENDMENT NO. 1 is made as of the 14th day of February, 2002 (the
"Amendment") by and between Xxxxx Xxxxxxxxx Partners, L.P., a Delaware limited
partnership ("KKP"), The Immune Response Corporation, a Delaware corporation
("Seller") and Oshkim Limited Partnership ("Oshkim").
WHEREAS, the Seller and the KKP entered into that certain Note Purchase
Agreement dated as of November 9, 2001 (the "Agreement").
WHEREAS, the Seller proposes to issue and sell Additional Securities to
Oshkim and Oshkim wishes to purchase Additional Securities from Seller.
WHEREAS, the parties desire to amend the Agreement to add Oshkim as a
party and in certain other respects as set forth below.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants set forth below, the parties hereby amend the Agreement and agree as
follows:
1. Effective as of the date of this Amendment, the Agreement is hereby
amended as follows:
a. Oshkim shall be a party to the Agreement.
b. All references in the Agreement to "Buyer" for all purposes
related to Additional Securities shall be deemed to refer to
Oshkim, and for all purposes related to the Securities shall be
deemed to refer to KKP.
c. The third recital on page one is hereby amended to add a new last
sentence which shall read in its entirety as follows:
"Notwithstanding the foregoing, the Additional Note issued on
February 14, 2002 shall have an initial Conversion Price equal to
the product of (i) one hundred twelve and one-half (112.5%)
percent multiplied by (ii) the average of the closing bid prices
of the Common Stock for the five (5) consecutive trading days
immediately preceding the issuance date of such Additional Note,
and the Additional Warrant issued on February 14, 2002 shall be
to purchase, pursuant to an additional warrant agreement, that
number of shares of the Common Stock equal to the principal loan
amount of such corresponding Additional Note divided by one
hundred twelve and one-half (112.5%) percent of the exercise
price per share of such Additional Warrant, which exercise price
shall be equal to the average of the closing bid prices of the
Common Stock for the five (5) consecutive trading days
immediately preceding the issuance date of such Additional
Warrant, determined and adjusted in accordance with, and subject
to the same terms and conditions provided in, the Warrant
Agreement, but shall only be exercisable to the extent that such
shares issuable on exercise of such Additional Warrant, when
aggregated with shares issuable on conversion of the Initial
Note, Initial Warrant and Additional Note, would not exceed
19.99% of the Seller's outstanding shares on November 9, 2001 in
order to be in compliance with NASD Rule 4350(i)(1)(D) until the
required shareholder approval of the issuance of the Notes and
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Warrants for purposes of NASD Rule 4350(i) has been obtained."
d. Section 3.2 is hereby amended to read in its entirety as follows:
"3.2 MATURITY. Unless otherwise converted into the Conversion
Shares (as defined in Section 3.4 hereof) in accordance with the
provisions hereof or unless extended in writing by Buyer in its
sole discretion, the Initial Note shall mature on May 5, 2002;
provided however that if the Seller shall receive shareholder
approval of the issuance of the Initial Note and Initial Warrant
for purposes of NASD Rule 4350(i) the Initial Note shall mature
on the three-year anniversary date of the date of issuance of
such Initial Note. The Additional Notes shall mature on the
three-year anniversary date of the date of issuance of such
Additional Note. The maturity dates for the Initial Note and for
any Additional Note each to be referred to as a "Note Maturity
Date." On the applicable Note Maturity Date of any of the Notes,
unless converted into the Conversion Shares in accordance with
the provisions hereof, all outstanding principal and any accrued
and unpaid interest due and owing on such Note shall be
immediately paid by Seller."
e. Section 3.4(a) is hereby amended to read in its entirety as
follows:
"3.4 CONVERSION; VOLUNTARY PREPAYMENT. (a) Subject to Section 3.5
hereof, Buyer may convert the principal and/or any accrued and
unpaid interest of any of the Notes, in whole or part, into
shares (the "Conversion Shares") of Common Stock at the
Conversion Price (as defined below) at any time and from time to
time on or after the date of issuance of such Note. For purposes
hereof, "Conversion Price" (which shall be hereafter subject to
adjustment as provided in Sections 3.7 and 3.8 hereof) for the
Notes shall mean the product of (i) 0.8 multiplied by (ii) the
average of the closing bid prices of the Common Stock for the ten
(10) consecutive trading days immediately preceding the issuance
date of such Note, except that for the Additional Note issued on
February 14, 2002 the Conversion Price shall mean the product of
(i) 1.125 multiplied by (ii) the average of the closing bid
prices of the Common Stock for the five consecutive trading days
immediately preceding the issuance date of such Additional Note.
The Conversion Price for the Initial Note, as of November 9,
2001, shall be $1.1536, subject to adjustment as set forth in
Sections 3.7 and 3.8 hereof. Upon conversion, Buyer shall receive
the number of shares of Common Stock calculated by dividing the
principal amount of, and (at Buyer's election) any interest on,
such Note being converted by the Conversion Price. No fractional
shares of Common Stock shall be issued upon conversion. In lieu
of any fractional shares to which Buyer would otherwise be
entitled, Seller shall pay cash in an amount equal to such
fraction multiplied by the Conversion Price. None of the Notes
shall be subject to automatic conversion or to conversion at the
option of Seller."
f. Section 3.7(a)(iii) is hereby amended to read in its entirety as
follows:
"(iii) In the event that Seller shall issue Additional Shares of
Common Stock (as defined in the Warrant Agreement) without
consideration or for a consideration per share less than the
then-applicable Conversion Price, then and in such event, such
Conversion Price shall be adjusted in the same manner (and in
accordance with the adjustment provisions set forth in the
Warrant Agreement) that the Exercise Price (as defined in the
Warrant Agreement) shall be adjusted in the event that Seller
shall issue Additional Shares of Common Stock without
consideration or for a consideration per share less than the
then-applicable Exercise Price. Notwithstanding the foregoing,
the Conversion Price shall be adjusted only to the extent such
adjustment will be in compliance with NASD Rule 4350(i)."
g. Section 3.7(a) is hereby amended to add a new subsection (iv)
which shall read in its entirety as follows:
"(iv) CARRYOVER. Notwithstanding the provisions of subsection
3.7(a)(iii) above, any adjustments to the Conversion Price which
would have been made but for the receipt of shareholder approval
of the issuance of the Notes and Warrants for purposes of NASD
Rule 4350(i), shall be carried forward and, upon receipt of any
required shareholder approval of the issuance of the Note and
Warrant for purposes of NASD Rule 4350(i), shall be made at such
time."
h. The language in the second to last sentence in Section 9(iv)
beginning with "(y) if such event . . ." and ending with "due and
payable." is hereby amended to read in its entirety as follows:
"(y) if such event is any other Event of Default, Buyer may, by
written notice to Seller, immediately declare all, or less than
all, of the Notes (with all accrued and unpaid interest thereon)
and all other amounts owing under this Agreement and any of the
Notes to be due and payable forthwith, whereupon the same shall
immediately become due and payable."
i. Section 6.2(c)(i) is hereby amended to read in its entirety as
follows:
"(i) If, as a result of a Conversion Price adjustment pursuant to
Section 3.7 hereof and/or an Exercise Price adjustment pursuant
to Section 3.3 of the Warrant Agreement, the Securities or
Additional Securities could be converted or exercised, as
applicable, into a number of shares of Common Stock in excess of
which Seller is permitted to issue (i.e., nineteen and 99/100
(19.99%) percent of the then-outstanding shares of Seller's
capital stock (the "Nasdaq Threshold")) under the rules or
regulations (the "Trading Regulations") of the NNM, or any stock
exchange or other self-regulatory organization to which Seller or
its securities is subject (collectively, "Nasdaq"), Seller shall
(x) promptly thereupon call and hold a meeting of its
stockholders in respect thereof and (y) use its best efforts to
(A) obtain the necessary approval of its stockholders, (B) obtain
an appropriate order from Nasdaq that there is an applicable
exemption from the Trading Regulations or (C) obtain a written
opinion from Seller's legal counsel that such approval is
otherwise not required, which opinion shall be reasonably
satisfactory to Buyer (each, a "Nasdaq Consent")."
2. Except as specifically provided herein, the Agreement, as originally
executed by the parties thereto and as amended hereby, shall remain in full
force and effect.
3. Any defined terms not defined herein shall have the respective meanings
set forth in the Agreement.
4. This Amendment may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
5. This Amendment shall be governed by and construed in accordance with
the internal laws of the State of New York applicable to agreements made and to
be performed entirely within such jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
XXXXX XXXXXXXXX PARTNERS, L.P.
By: /s/ Xxxxx Xxxxxxxxx
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Name: Xxxxx Xxxxxxxxx
Title: Member Manager
OSHKIM LIMITED PARTNERSHIP
By: /s/ Xxxxx Xxxxxxxxx
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Name:Xxxxx Xxxxxxxxx
Title: General Partner
THE IMMUNE RESPONSE CORPORATION
By: /s/ Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx
Title: Vice President, Finance
Chief Financial Officer,
Treasurer
