<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
Amendment No. 1
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarter ended June 30, 1998.
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________.
Commission File No. 0-18006
THE IMMUNE RESPONSE CORPORATION
-------------------------------
(Exact name of registrant as
specified in its charter)
Delaware 33-0255679
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5935 Darwin Court
Carlsbad, California 92008
----------------------------------------------------
(Address of principal executive offices and zip code)
(760) 431-7080
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- ------
As of March 7, 1998 , 23,197,810 shares of common stock were outstanding.
-1-
<PAGE>
THE IMMUNE RESPONSE CORPORATION
INDEX
PART II: OTHER INFORMATION
<TABLE>
<CAPTION>
PAGE
<S> <C>
Item 6: Exhibits and Reports on Form 8-K 3
SIGNATURES 4
</TABLE>
-2-
<PAGE>
THE IMMUNE RESPONSE CORPORATION
PART II-OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<S> <C>
3(i)* Restated Certificate of Incorporation of the Company, as amended
by Certificate of Designations, Preferences and Rights of Series
F Convertible Preferred Stock.
10.1* Securities Purchase Agreement dated as of April 24, 1998 by and
among the Company and Investors.
10.2* Registration Rights Agreement dated as of April 24, 1998 by and
among the Company and the Investors.
10.65(1) Letter of Intent as of June 11, 1998 between Agouron
Pharmaceuticals, Inc. and The Immune Response Corporation.
10.66(1) Common Stock Purchase Agreement dated as of June 11, 1998 between
Agouron Pharmaceuticals, Inc. and The Immune Response
Corporation.
27** Financial Data Schedule.
</TABLE>
(b) Reports on Form 8-K
A report on Form 8-K dated April 24, 1998, was filed by The Immune Response
Corporation reporting under Item 5 that the Company had sold 200 shares of
its Series F Convertible Preferred Stock in return for gross proceeds of
$10 million.
- ----------
* Incorporated by reference to exhibits of the same number filed with the
Company's Form 8-K dated April 24, 1998 (File No. 0-18006).
** Previously filed.
(1) The Registrant has requested confidential treatment of certain portions of
these agreements.
-3-
<PAGE>
THE IMMUNE RESPONSE CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Amendment to Report to be signed on its behalf
by the undersigned thereunto duly authorized.
THE IMMUNE RESPONSE CORPORATION
Dated: March 22, 1999 By: /s/ Dennis J. Carlo
--------------------------
Dennis J. Carlo
President, Chief Executive
Officer and Chief Scientific
Officer
Dated: March 22, 1999 By: /s/ Rand P. Mulford
----------------------------
Rand P. Mulford
Chief Financial Officer and
Senior Vice President,
Corporate Development
-4-
<PAGE>
THE IMMUNE RESPONSE CORPORATION
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description of Document
- ------------- -----------------------
<S> <C>
3(i)* Restated Certificate of Incorporation of the Company, as
amended by Certificate of Designations, Preferences and
Rights of Series F Convertible Preferred Stock.
10.1* Securities Purchase Agreement dated as of April 24, 1998 by
and among the Company and Investors.
10.2* Registration Rights Agreement dated as of April 24, 1998 by
and among the Company and the Investors.
10.65(1) Letter of Intent as of June 11, 1998 between Agouron
Pharmaceuticals, Inc. and The Immune Response Corporation.
10.66(1) Common Stock Purchase Agreement dated as of June 11, 1998
between Agouron Pharmaceuticals, Inc. and The Immune
Response Corporation.
27** Financial Data Schedule.
</TABLE>
- ----------
* Incorporated by reference to exhibits of the same number filed with the
Company's Form 8-K dated April 24, 1998 (File No. 0-18006).
** Previously filed.
(1) The Registrant has requested confidential treatment of certain portions of
these agreements.
-5-
<PAGE>
LETTER OF INTENT
THIS LETTER OF INTENT is made on the 11th day of June 1998, by and between
Agouron Pharmaceuticals, Inc., a corporation duly organized and existing under
the laws of the state of California, having a principal place of business at
10350 North Torrey Pines Road, La Jolla, California 92037 (hereinafter called
"Agouron"), and The Immune Response Corporation, a corporation duly organized
and existing under the laws of the state of Delaware, having a principal place
of business at 5935 Darwin Court, Carlsbad, California 92008 (hereinafter called
"Immune Response"). Agouron and Immune Response are sometimes hereinafter
referred to as a party (collectively "parties") to this Agreement.
BACKGROUND
In accordance with the terms of this Letter of Intent, Immune Response has
agreed to license to Agouron the exclusive rights necessary or useful for the
registration and/or commercialization of the product known as REMUNE, a non-
infectious intact Human Immunodeficiency Virus ("HIV") devoid of outer envelope
proteins. This Letter of Intent, which shall be binding on the parties, sets
forth the basic license terms upon which the parties have agreed. The full
terms of the license will be set forth in a definitive agreement to be prepared
as described below.
NOW, THEREFORE, the parties agree as follows:
1. TERMS. The parties hereby enter into this Letter of Intent to confirm
their entering into a license agreement on terms substantially in accordance
with those contained in Exhibit A hereto. The parties acknowledge that
Exhibit A states the basic terms of the understanding between the parties and
anticipate the further negotiation and preparation of an agreement containing
the full terms of the license between the parties ("Definitive Agreement").
Each party agrees to act in good faith in an effort to negotiate, execute and
deliver the Definitive Agreement on or before September 1, 1998. If the
Definitive Agreement is not executed by September 1, 1998, the provisions of
this Letter of Intent shall continue in effect until the Definitive Agreement
is executed, and the parties will continue to negotiate in good faith in an
effort to execute and deliver the Definitive Agreement as soon as possible.
2. DISCLOSURE. The parties shall jointly prepare and release a statement
about the existence of this Letter of Intent and of the license between Agouron
and Immune Response. Except as agreed to by the parties, neither Agouron nor
Immune Response shall release any further information to any third party who is
not under an obligation of confidentiality with respect thereto about any of the
terms of this Letter of Intent, or of the license, or of results of clinical
trials of REMUNE, without the prior written consent of the other, which consent
shall not unreasonably be withheld. This prohibition includes, but is not
limited to, press releases, educational and scientific conferences, promotional
materials and discussions with the media. If a party determines that it is
required by law to release information to any third party regarding such
matters, it shall notify the other party of this fact prior to releasing the
information. The notice to the other party shall include the text of the
information proposed for release. The
* * * - Confidential treatment requested. Sections of text which have been
omitted and for which confidential treatment is requested are noted with "***".
An unredacted version of this document has been filed separately with the
Securities and Exchange Commission.
1
<PAGE>
other party shall have the right to confer with the notifying party regarding
the necessity for the disclosure and the text of the information proposed for
release.
3. MISCELLANEOUS. This Letter of Intent contains the entire agreement between
the parties as of the date hereinabove written on the matters set forth herein
and shall be governed by and construed in accordance with the laws of the State
of California. Exhibit A describes the parties' understanding with respect to
the registration and commercialization of the "Product" as defined therein. This
Letter of Intent, including Exhibit A, shall not be amended, supplemented or
otherwise modified, except by an instrument in writing signed by duly authorized
officers of both parties. Each party shall bear all of the expenses incurred by
it in connection with the negotiation and preparation of this Letter of Intent
and the Definitive Agreement. Each party represents and warrants that it is not
presently bound by any agreement with any third party which limits its
performance of any of the obligations or activities provided for under this
Letter of Intent or contemplated by the Definitive Agreement. Immune Response
represents and warrants that it is not aware of any patents, patent applications
and/or know-how that it does not have the right to license to Agouron which is
necessary or useful for commercialization of Product by Agouron. Immune
Response further represents and warrants that it will not enter into any
agreements which limit Immune Response's performance of any of the obligations
or activities provided for under this Letter of Intent or contemplated by the
Definitive Agreement. Immune Response, at its expense, shall obtain any
government approval(s) not related to drug product registration, which are
required to enable this Agreement to become effective. At any time after
October 15, 1998, Agouron may elect to immediately terminate, in their entirety,
all of its rights and obligations under this Letter of Intent and the Definitive
Agreement, except that Agouron may exercise this right to terminate only on the
basis of its concerns related to the safety, efficacy, competitiveness, or
commercial feasibility of Product.
IN WITNESS WHEREOF, the parties hereto have executed this Letter of Intent
by their respective officers thereunto duly authorized, as of the date
hereinabove written. This Letter of Intent may be executed in counterparts and
all of such counterparts taken together shall be deemed to constitute one and
the same instrument.
THE IMMUNE RESPONSE CORPORATION AGOURON PHARMACEUTICALS, INC.
By: s/Dennis J. Carlo By: s/Peter Johnson
-------------------- --------------------
Name: Dennis J. Carlo Name: Peter Johnson
-------------------- --------------------
Title: President Title: President
-------------------- --------------------
By: s/Charles J. Cashion By: s/Gary Friedman
-------------------- --------------------
Name: Charles J. Cashion Name: Gary Friedman
-------------------- --------------------
Title: Senior VP Title: Secretary
-------------------- --------------------
2
<PAGE>
EXHIBIT A
Immune Response, under the terms and conditions specified below, hereby
grants Agouron the exclusive right to use, offer for sale, sell and/or
import, in or into the Licensed Territory, the Product under applicable
Immune Response Patent Rights (including claims therein relating to
compositions and methods of use) and using applicable Immune Response
Know-How.
1. Definitions: Except as otherwise set forth herein, items containing an
initial capitalized letter shall have the meaning stated below or in the
Letter of Intent to which this Exhibit A is an attachment ("LOI").
(a) "Product" means a pharmaceutical product comprising a non-infectious
intact HIV devoid of outer envelope proteins whose manufacture, use or
sale infringes (in the absence of the license rights granted under
this Exhibit A) a valid claim (which has not been abandoned,
disclaimed or declared invalid in a non-appealable order) included in
an issued patent within the Immune Response Patent Rights.
(b) "Licensed Territory" means all countries of the world except the
countries listed in Schedule 1.
(c) "Affiliate" means any person, organization or entity which is,
directly or indirectly, controlling, controlled by, or under common
control with Agouron or Immune Response, as the case may be. The term
"control" (including, with correlative meaning, the terms "controlled
by" and "under common control with"), as used with respect to any
person or entity, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies
of such person, organization or entity, whether through the ownership
of voting securities, or by contract, or court order, or otherwise.
The ownership of voting securities of a person, organization or entity
shall not, in and of itself, constitute "control" for purposes of this
definition, unless said ownership is of a majority of the outstanding
securities entitled to vote of such person, organization or entity.
Affiliate shall also mean a limited partnership in which a subsidiary
of Agouron and/or Immune Response is a general partner.
(d) "Immune Response Patent Rights" means (i) the patents and the patent
applications referred to in Schedule 2 of this Exhibit A; (ii) all
patents arising from said applications, and all patents and patent
applications based on, claiming the priority date(s) of, or
corresponding to any of the foregoing; or (iii) any reissues,
extensions (or other governmental actions that provide exclusive
rights to the patent holder in the patented subject matter beyond the
original patent expiration date), substitutions, confirmations,
registrations, revalidations, re-examinations, additions,
continuations, continuations-in-part, or divisions of or to any of the
foregoing.
*** - Confidential treatment requested. Sections of text which have been
omitted and for which confidential treatment is requested are noted with "***".
An unredacted version of this document has been filed separately with the
Securities and Exchange Commission.
A-1
<PAGE>
(e) "Immune Response Know-How" means any know-how, trade secret,
experimental data, formula, expert opinion, experimental procedure,
and other confidential and/or proprietary information specifically
concerning the Product that is Controlled by Immune Response and that
is necessary or useful for either: (i) the formulation, manufacture,
use and/or application of the Product; or (ii) obtaining registration
of the Product.
(f) "Control" and "Controlled" mean possession of the ability to grant a
license or sublicense as provided for herein without violating the
terms of any agreement with, or arrangement with, any third party.
(g) The terms "Net Sales," "Pre-Tax Profits," "Allowable Expenses" and
"Manufacturing Transfer Markup" shall be fully defined in the
Definitive Agreement. The terms "Net Sales and "Allowable Expenses"
shall be determined in accordance with generally accepted accounting
principles and the usual and customary practices of the parties.
2. As provided below, Immune Response and Agouron shall collaborate to
complete the current program of clinical trials of the Product, including
those aimed at achieving registration of the Product in the Licensed
Territory, in an expeditious manner. Immune Response and Agouron agree to
the following basic approaches to the registration of Product in the
Licensed Territory and the conduct of a committee to be formed to
coordinate the parties' registration of Product in the Licensed Territory:
(a) Immune Response and Agouron shall use reasonable diligence in the
registration of the Product.
(b) A committee, co-chaired by representatives of Immune Response and
Agouron and comprised of representatives from Immune Response and
Agouron, shall be formed to coordinate the registration of the Product
in the Licensed Territory and such other matters that the parties
mutually agree to assign to it. Decisions of the committee shall be
made by a unanimous vote of the committee, with each party having one
(1) vote, regardless of the number of representatives attending a
meeting. The committee shall meet regularly, at least four times per
year, and shall assign study or other registration activities between
the parties as described in this Paragraph 2.
(c) The committee shall review and discuss the registration plans for any
countries involved, as well as a coordinated general strategy and
priorities for preclinical and clinical registration of Product in the
Licensed Territory. Each party's members of the committee will
reasonably consider the adoption of the other party's suggestions and
will accept as many of such suggestions as are reasonable, based upon
medical rationale, drug supply, and the need to conduct the studies in
an expeditious and cost-efficient manner.
(d) The parties will share responsibility and authority to obtain
regulatory approvals for the Product in the Licensed Territory. If
there is a disagreement among the parties concerning an issue related
to the registration of the Product in the Licensed Territory, the
issue shall be resolved in accordance with the provisions of Paragraph
17.
*** - Confidential treatment requested.
A-2
<PAGE>
(e) Agouron, at its expense (except for the cost of clinical supplies of
Product to be provided to Agouron pursuant to the provisions of
Paragraph 9), shall, using reasonable efforts, initiate and conduct a
200-plus patient viral load study to support registration of the
Product.
(f) In partial consideration for the rights granted to Agouron, Agouron
will make up to six (6) quarterly payments of three million dollars
($3,000,000) each to support clinical and manufacturing development
and scale-up of the Product beginning on October 15, 1998, and every
ninety (90) days thereafter, until the earlier of: (i) January 15,
2000; or (ii) the approval of a Product License Application ("PLA")
for the Product in the United States. The above quarterly payments of
three million dollars ($3,000,000) each to support clinical and
manufacturing development and scale-up of the Product shall only be
due and payable by Agouron if Agouron has not elected to terminate, in
its entirety, all of its rights and obligations under the LOI and the
Definitive Agreement before the last permitted payment date for the
applicable quarterly payment.
(g) Immune Response will complete, at its expense, the current worldwide
program of clinical trials of the Product, including the studies
listed in Schedule 3, and will promptly and fully disclose to Agouron
the results of the interim and final analyses of data from these
clinical trials.
(h) Agouron will provide, at its expense, regulatory staff support for
preparation of registration documents as such support is reasonably
requested by Immune Response.
(i) Agouron, notwithstanding the preceding, will be responsible for
negotiating labeling, pricing and reimbursement for Product with the
applicable regulatory authorities in the Licensed Territory, and after
registration of the Product will have the primary responsibility for
the ongoing correspondence and interaction with the applicable
regulatory authorities. Immune Response will provide reasonable
assistance to Agouron in such interactions, if necessary.
(j) Except as provided above, the committee, in assigning the
responsibility for performing specific tasks or activities related to
a study or registration activity among the parties, shall make such
assignments principally based on: (i) the available resources each of
the parties can commit to the task or activity; (ii) the expertise of
each of the parties in conducting or monitoring the task or activity;
(iii) which party can perform the task or activity in the most
expeditious manner; and (iv) which party can perform the task or
activity in the most cost-efficient manner. A party not responsible
for the performance of a task or activity may provide advisory and
support services to the other party. The committee may establish
interdisciplinary project teams comprised of representatives of both
parties having the specialized skills necessary to oversee the conduct
of specific day-to-day registration
*** - Confidential treatment requested
A-3
<PAGE>
activities. The committee shall establish procedures concerning the
scope and conduct of activities (including decision-making procedures)
assigned to such project teams.
(k) Each party shall keep the other party informed of its progress in the
registration of Product, including making oral presentations of
progress at the committee meetings and/or the preparing of such
written progress reports as are agreed to by the parties summarizing
such party's activities during each reporting period and its planned
activities for the succeeding period. Each of the parties will assign
a representative to facilitate communications between the parties;
each representative shall report to his/her management on the matters
discussed at each of the meetings of the parties.
(l) Immune Response will disclose to Agouron all relevant Immune Response
Know-How, including, but not limited to, data and information which it
possesses from the pre-clinical and clinical studies of Product
(including toxicology, pharmacokinetics and formulation studies) in a
format which will facilitate the preparation for any regulatory
filings or other correspondence to be filed or made by Agouron.
(m) Immune Response will provide assistance to Agouron in accessing
clinical investigators, clinical sites and testing laboratories for
the purposes of data interpretation and/or evaluation and conduct of
registration activities assigned to Agouron.
(n) Immune Response shall use its reasonable efforts to coordinate its
registration activities in any country(s) located outside the Licensed
Territory with the registration activities of the parties in the
Licensed Territory.
(o) If a licensee of Immune Response wishes to use the results of studies
conducted by Agouron in such licensee's registration and
commercialization activities in a country(s) located outside of the
Licensed Territory, the parties shall enter into good-faith
discussions about the sharing of the costs of such studies and/or the
granting to Agouron of equivalent rights to use the results of any
studies conducted by such licensee.
(p) If development of the Product is discontinued in a country located in
the Licensed Territory due to safety, efficacy or regulatory issues or
by mutual agreement of the parties and Agouron is interested in
developing a substitute drug product whose manufacture, use or sale
would infringe (in the absence of the license rights granted under
this Exhibit A) a valid claim (which has not been abandoned,
disclaimed or declared invalid in a non-appealable order) included in
an issued patent within the Immune Response Patent Rights, then Immune
Response and Agouron shall enter into good faith negotiations
regarding the terms of a license between Immune Response and Agouron
for such substitute drug product. During the period that Agouron is
participating in the development and/or commercialization of the
Product and/or another drug product whose manufacture, use or sale
infringes (in the absence of the license rights granted under this
Exhibit A) a valid claim (which has not been
*** - Confidential treatment requested
A-4
<PAGE>
abandoned, disclaimed or declared invalid in a non-appealable order)
included in an issued patent within the Immune Response Patent Rights,
Immune Response agrees not to commercialize in the Licensed Territory
other drug products whose manufacture, use or sale is covered by a
valid claim (which has not been abandoned, disclaimed or declared
invalid in a non-appealable order) in an issued patent within the
Immune Response Patent Rights, on its own or with a third party, other
than Agouron, its Affiliates or sublicensees.
3. In partial consideration for the rights granted to Agouron, Agouron will
make the following license-fee milestone payments to Immune Response:
<TABLE>
<CAPTION>
Milestones Payment (US Dollars)
---------- -------------------
<S> <C>
Within 30 days of execution of the LOI $10,000,000
*** $ ***
*** $ ***
*** $ ***
*** $ ***
-----------
Total Milestone Payments $45,000,000
-----------
-----------
</TABLE>
The above license fee milestone payments shall be payable by Agouron one time
only and shall only be due if Agouron has not elected to terminate, in its
entirety, all of its rights and obligations under the LOI and the Definitive
Agreement before the last permitted payment date for the applicable milestone
payment.
4. Prior to approval of the Product in the United States, Agouron will, "***."
5. The right of Agouron to market Product in the Licensed Territory shall be
subject to commercially reasonable marketing efforts by Agouron, on a
country-by-country basis. For purposes of this paragraph,
commercialization efforts undertaken by Agouron's Affiliates and
sublicensees shall be attributed to Agouron. Agouron shall begin
commercial sales of the in a country no later than "***" after the first
registration of Product in such country; provided, however, that such
period shall be extended for as long as commercially reasonable marketing
efforts to begin commercial sales continue. Following commencement of
commercial sales in a country, Agouron shall keep Product reasonably
available to the public; provided, however, that Agouron shall be released
from this obligation if supply of Product is
*** - Confidential treatment requested
A-5
<PAGE>
not available for such country and Agouron is not responsible for arranging
for the commercial production and supply of Product for such country.
6. The term of the license rights granted hereunder will extend on a
country-by-country basis from the effective date of the signing of the
LOI until the last-to-expire of any patents within the Immune Response
Patent Rights covering the Product in such country (as extended by any
governmental actions which provide exclusive rights to the patent holder
in the patented subject matter beyond the original patent expiration
date).
7. Agouron shall have the right to sublicense its rights in the Product in one
or more countries of the Licensed Territory. In the event that Immune
Response or its Affiliates shall in the future obtain Control of one or
more additional patent rights and/or know-how necessary or useful for the
commercialization of the Product in the Licensed Territory, then Immune
Response shall grant to Agouron an exclusive license consistent with the
terms of this Exhibit A which adds such patent rights and know-how to the
scope of the applicable Immune Response Patent Rights and Immune Response
Know-How, without any additional obligations due from Agouron to Immune
Response. To the extent that Immune Response grants rights in the Product
to a third party and such third party invents or discovers inventions
and/or know-how necessary or useful for the commercialization of the
Product in the Licensed Territory, then Immune Response shall use its
reasonable efforts to secure rights for Agouron to use such inventions and
know-how.
8. Immune Response hereby grants to Agouron, its Affiliates and sublicensees a
perpetual paid-up, royalty-free, worldwide, exclusive right to use Immune
Response's trademark REMUNE-TM- in the marketing of the Product in the
Licensed Territory.
9. Immune Response shall supply Agouron, and Agouron shall purchase from
Immune Response, sufficient commercial supplies of Product to support and
sustain the launch and subsequent patient demand for Product in the
Licensed Territory. Immune Response hereby agrees to use its commercially
reasonable efforts to have sufficient manufacturing capacity at its
facilities to supply Agouron with commercial quantities of Product which
are necessary for the launch of such Product in the Licensed Territory and
agrees to have at least a monthly manufacturing capacity for the Licensed
Territory of "***" unit doses/month of such Product at the time of launch
of such Product. Immune Response agrees, at its expense, to maintain
commercially reasonable inventory and safety stock of Product for the
Licensed Territory. Immune Response further agrees to discuss with
Agouron, in good faith, Immune Response's acquisition of additional
manufacturing capacity required to meet the projected patient demand for
the Product for the Licensed Territory. Immune Response shall use
diligence in its manufacturing activities and shall provide Agouron such
technical support for the Product as it may reasonably requested.
Commercial supplies of Product shall be supplied to Agouron at Immune
Response's "***."
*** - Confidential treatment requested
A-6
<PAGE>
10. Immune Response agrees not to enter into any contractual arrangement with
its licensees outside the Licensed Territory which would limit Immune
Response's ability to fully fulfill Agouron's product requirements for the
Licensed Territory, or which would require Immune Response to allocate its
manufacturing capacity among such licensees and Agouron. If supply
shortages of Product are expected to occur during a calendar quarterly
period, and Immune Response's available supply of drug product is required
to be allocated among Immune Response's licensees, Immune Response shall
allocate the available supply of drug product among Immune Response's
licensees during such calendar quarterly period on a pro-rata basis, based
upon: (i) the relative utilization of such Product in each licensee's
respective territories during the twelve (12) month period ending on the
first day of such calendar quarterly period (based on historical sales data
during such twelve (12) month, to the extent such data is available); and
(ii) the projected sales of such Product in each licensee's respective
territories during the twelve (12) month period commencing with the first
day of such calendar quarterly period.
11. If Immune Response is unable to provide Agouron with its requirements of
Product in a timely and cost-efficient manner, Immune Response agrees to
assist Agouron in the identification of alternative low-cost manufacturing
sources for the Product, including but not limited to, access to current
suppliers of starting materials, intermediates, bulk material and/or
finished Product. Immune Response in such circumstances will grant Agouron
the non-exclusive worldwide right to make and have made Product under
applicable Immune Response Patent Rights and Immune Response Know-How
relating to processes, intermediates and materials for manufacturing
Product, and will provide to Agouron without charge, to the extent
available, technical and manufacturing assistance and use of its technology
and proprietary information for the Product, including information on its
analytical methods, validation reports and manufacturing processes.
12. Pre-Tax Profits generated from aggregate Net Sales and royalties from
Products in the Licensed Territory on a country-by-country basis shall be
shared equally by Immune Response and Agouron on a fifty-fifty basis.
"***."
*** - Confidential treatment requested
A-7
<PAGE>
13. At any time after October 15, 1998, Agouron may elect to immediately
terminate its development obligations in the Licensed Territory for Product
under the LOI and the Definitive Agreement, except that Agouron may
exercise this right to terminate only on the basis of its concerns related
to the safety, efficacy, competitiveness, or commercial feasibility of
Product. In the event that Agouron elects to terminate its development
obligations for Product under the LOI and the Definitive Agreement, Immune
Response, its Affiliates and sublicensees shall be free, without any
further action by Immune Response or Agouron, to develop and/or
commercialize Product in the Licensed Territory, on their own, or with any
third party, and to retain, use and disclose to any such third party
information and materials that have been developed by Agouron in its
development activites for Product; provided, that Immune Response shall not
disclose to such third party the confidential and proprietary information
of Agouron (other than clinical, regulatory and manufacturing information
and materials specifically relating to Product). In the event of the
termination of Agouron's development obligations in the Licensed Territory
for Product under the LOI and the Definitive Agreement, the licenses
granted to Agouron to use, offer for sale, sell and/or import, in or into
the Licensed Territory, the Product under applicable Immune Response Patent
Rights and using applicable Immune Response Know-How, shall be terminated.
Agouron shall transfer ownership of any dossiers for Product in the
Licensed Territory to Immune Response, and shall cooperate with Immune
Response to effect an orderly transition of Agouron's development
responsibilities in the Licensed Territory to Immune Response.
14. At any time after October 15, 1998, Agouron may elect to immediately
terminate, on a country-by-country basis, its marketing rights for Product
in the Licensed Territory under the LOI and the Definitive Agreement,
except that Agouron may exercise this right to terminate only on the basis
of its concerns related to the safety, efficacy, competitiveness, or
commercial feasibility of Product. In the event that Agouron elects to
terminate its marketing rights for Product in a country: (i) the licenses
granted to Agouron to use, offer for sale, sell and/or import, in or into
such country, the Product under applicable Immune Response Patent Rights
and using applicable Immune Response Know-How, shall be terminated, and
Immune Response and its Affiliates and sublicensees shall be free to market
such Product in such country, on its own, or with any third party; (ii)
Agouron shall transfer ownership to Immune Response of any dossiers for
Product in such country; and (iii) Agouron shall cooperate with to Immune
Response to effect an orderly transition of Agouron's marketing
responsibilities in such country to Immune Response.
15. Immune Response, in accordance with the reasonable directions of Agouron,
shall prepare, file, prosecute, maintain and extend: (i) patent
applications and patents included in the Immune Response Patent Rights; and
(ii) applicable Immune Response trademarks. Immune Response shall own any
Immune Response Patent Rights and Immune Response trademarks and shall be
responsible for all preparation, filing, prosecution, maintenance,
extension and enforcement expenses for such Immune Response Patent Rights
and Immune Response trademarks. Within fourteen (14) days after the
execution of the LOI, Immune Response shall provide Agouron with copies of
the material patent prosecution file histories for the Immune Response
Patent Rights. Immune Response shall be solely responsible for any
*** - Confidential treatment requested
A-8
<PAGE>
royalties or other payments due to Rhone-Poulenc Rorer Inc. (including
payments due because of license fees or commercial sales of the Product)
because of their previously contractual arrangement (or the termination
thereof) involving the Product. "***."
16. This Agreement shall be assignable by a party with the prior written
consent of the other party. Any assignment (other than to an Affiliate)
without the prior written consent of the other party shall be void. If
this Agreement is assigned to an Affiliate of a party, the assigning party
shall still be responsible for all of its obligations specified in this
Agreement. Notwithstanding the preceding, the LOI shall be assignable to
the transferee or successor company in the event of: (i) a sale or
transfer of all or substantially all of a party's assets; or (ii) the
merger or consolidation of the party with another company.
17. If the representatives of the parties are unable to reach agreement on a
decision required under the terms of the LOI, the issue shall be submitted
for consideration, in the case of Immune Response, to a designee of its
Chief Executive Officer, and, in the case of Agouron, to a designee of its
Chief Executive Officer. If they are unable to agree, then the Chief
Executive Officers of the parties shall agree upon the appropriate
decision. If the Chief Executive Officers of the parties are unable to
reach agreement on a decision required of them, then the issue shall be
settled by arbitration in San Diego, California in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then
in effect. The decision of the arbitrator(s) shall be final and binding on
all parties. The cost of such arbitration shall be borne by the
non-prevailing party, unless otherwise decided by the arbitrator(s).
18. "***."
19. Neither party shall be held liable or responsible to the other party nor be
deemed to have defaulted under or breached the LOI for the failure or delay
in fulfilling or performing any term of the LOI to the extent, and for so
long as, such failure or delay is caused by or results from causes beyond
the reasonable control of the affected party, including but not limited to
fire, floods, embargoes, war, acts of war (whether war is declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God, or acts, omissions or delays in acting by any
governmental authority or the other party.
*** - Confidential treatment requested
A-9
<PAGE>
20. In partial consideration for the rights granted to Agouron, Agouron will
purchase from Immune Response two million dollars ($2,000,000) of
unregistered Immune Response Common Stock on each of the purchase dates
listed below at the premiums to Fair Market Value ("FMV") set forth
opposite the applicable purchase date:
<TABLE>
<CAPTION>
Purchase Date Premium
--------------------- --------
<S> <C>
Execution Date of LOI 50%
10/15/98 ***
1/15/99 ***
4/15/99 ***
7/15/99 ***
10/15/99 ***
1/17/00 ***
</TABLE>
FMV shall mean the average closing price of Immune Response Common Stock
for the five trading days immediately preceding the above purchase dates;
provided, however, that if the FMV of Immune Response Common Stock is "***"
on the applicable purchase date, the premium to FMV shall be "***."
Agouron's obligation to purchase Immune Response Common Stock shall
terminate with respect to any purchase obligations whose applicable
purchase dates occur after Agouron has elected to terminate, in its
entirety, all of its rights and obligations under the LOI and the
Definitive Agreement.
*** - Confidential treatment requested
A-10
<PAGE>
SCHEDULE 1
COUNTRIES NOT INCLUDED IN THE LICENSED TERRITORY
The following countries, subject to the provisions of Paragraph 18 of Exhibit A,
are excluded from the Licensed Territory "***:"
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
***
The following countries, subject to the provisions of Paragraph 18 of Exhibit
A, are excluded from the Licensed Territory "***."
***
***
***
***
***
***
***
***
***
***
*** - Confidential treatment requested
S-1
<PAGE>
SCHEDULE 2
IMMUNE RESPONSE PATENT RIGHTS
U.S. Patent No. 5,256,767, issued October 26, 1993, from U.S. Patent
Application Serial No. 07/975,899, filed November 10, 1992.
"***."
"***."
*** - Confidential treatment requested
S-2
<PAGE>
SCHEDULE 3
SUMMARY OF CLINICAL TRIALS OF PRODUCT BEING CONDUCTED BY IMMUNE RESPONSE
1. Trial 806 is a multi-center, double-blind, Phase III clinical end point
study. Patients are HIV positive with CD4 counts between 300 and 549
cells/mul.
2. Trial 816 is a multi-center, double-blind, Phase II study intended to
evaluate the combination of REMUNE-TM- and triple antiviral drug therapy
(AZT, 3TC and Crixivan) on the induction of an HIV-1 specific immune
response. Patients are HIV positive with CD4 counters > 350 cells/ul.
3. Trial 2102 is a multi-center, double-blind, adjuvant-controlled, Phase II
study of REMUNE plus AZT and ddI versus AZT and ddI alone in HIV-infected
subjects. The trial is being conducted in Spain and patients have CD4
counts between 300 and 700 cells/mul.
4. Trial 808 is a Phase I study to evaluate the safety and immunogenicity of
REMUNE in children with HIV-infection.
5. The Switzerland trial is a single center, randomized, open label, Phase II
study combining antiviral therapy (1592U89) plus Nelfinavir plus Saquinavir
or 141W94) alone or antiviral therapy plus immune-based therapy
(subcutaneous interleukin-2 or REMUNE) in antiviral naive HIV-1 infected
subjects with CD-4 + counts > 250 cells/mul.
6. The England trial is a single center, randomized, open labeled Phase I
study of antiviral therapy (two nucleoside analogues and at least one
protease inhibitor) versus antiviral therapy plus IL-2; antiviral therapy
plus IL-2 plus REMUNE; antiviral therapy plus REMUNE. Patients are HIV
positive with CD4 counts > 300 cells/mul.
7. Trial 818 is a Phase II study intended to evaluate the combination of
interferon-alpha (IFN) and REMUNE on HIV-1 specific immunogenicity in HIV-1
infected subjects with CD-4 counts > 300 cells/mul.
8. Trial 2101B is a Phase II, double-blind, randomized, adjuvant controlled
study of REMUNE.
9. Trial 822 is a randomized, double-blind, adjuvant controlled, research
study to evaluate the combination of REMUNE and HAART on the induction of
HIV-1 specific immune responses.
S-3
<PAGE>
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement ("Agreement") is made and entered into
as of June 11, 1998 by and between THE IMMUNE RESPONSE CORPORATION., a Delaware
corporation (hereinafter referred to as the Company) and AGOURON
PHARMACEUTICALS, INC., a California corporation ("Agouron"), which parties
hereby agree as follows:
1. AUTHORIZATION; COMMITMENT; CLOSING
1.01 AUTHORIZATION. The Company proposes to authorize, issue and sell
to Agouron on or before January 15, 2000, certain amounts of its common stock,
$.0025 par value ("Common Stock"), as described and determined below.
1.02 COMMITMENT. Subject to Paragraph 5.06 and the terms and conditions
hereof and on the basis of the representations and warranties hereinafter set
forth, the Company agrees to issue and sell to Agouron, and Agouron agree to
purchase from the Company as of the dates and for the consideration set forth
below, the number of shares of the Company's Common Stock as determined below.
The Common Stock which Agouron is acquiring pursuant to the terms of this
Agreement is hereinafter referred to as "Restricted Common Stock". Agouron is
hereinafter sometimes referred to as the "Purchaser." The purchases of the
Common Stock shall occur on the seven purchase dates set forth below. On each
purchase date, Agouron shall be entitled to acquire such number of shares of
Restricted Common Stock (rounded up to the nearest whole share) as may be
purchased for $2,000,000, at a purchase price equal to the stated premium set
forth opposite the applicable purchase date, over the then fair market value
("FMV") of the Common Stock on The NASDAQ Stock Market. FMV shall be defined as
the average closing price of the Common Stock on The NASDAQ Stock Market for the
five (5) trading days immediately preceding the referenced purchase date. In
the event the FMV is "***" on any purchase date, the premium applicable to such
purchase date shall be adjusted to "***."
<TABLE>
<CAPTION>
Purchase Date Purchase Price Premium Over FMV
- ------------- -------------- ----------------
<S> <C> <C>
June 11, 1998 $2,000,000 50%
October 15, 1998 $2,000,000 ***
January 15, 1999 $2,000,000 ***
April 15, 1999 $2,000,000 ***
July 15, 1999 $2,000,000 ***
October 15, 1999 $2,000,000 ***
January 15, 2000 $2,000,000 ***
</TABLE>
1.03 CLOSING. Separate closings of the purchase and sale of the
Restricted Common Stock ("Closings") shall occur on each of the purchase dates
set forth above and shall take place at such time and place as the Company and
Purchaser shall agree. At each Closing the Company shall deliver to Purchaser
the number of shares of Restricted Common Stock required by Paragraph 1.02,
above, upon delivery to the
*** - Confidential treatment requested. Sections of text which have been
omitted and for which confidential treatment is requested are noted with "***".
An unredacted version of this document has been filed separately with the
Securities and Exchange Commission.
<PAGE>
Company by Purchaser of a certified check or wire transfer of funds in the
amount of $2,000,000. The Restricted Common Stock to be delivered to Agouron
hereunder at each Closing will be evidenced by a single certificate registered
in Agouron's name or in the name of such nominee as Agouron may specify and,
when issued in accordance with the terms of this Agreement for the consideration
expressed herein, will be duly authorized, validly issued, fully paid,
nonassessable and free and clear of any liens or encumbrances caused or created
by the Company (except that such Restricted Common Stock of the Company will be
subject to restrictions on transfer under federal and applicable state
securities laws).
2. REPRESENTATIONS
2.01 REPRESENTATIONS OF THE COMPANY. The Company represents and
warrants as follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority which are
necessary to own and operate its business and properties and to
carry on its business as it is being conducted. The Company is
duly licensed and qualified and in good standing in the State of
California and in such other jurisdictions in which the ownership
or lease of property or the conduct of its business makes such
licensing or qualification necessary.
(b) There are no proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company in any court
or before any governmental authority or agency or arbitration
board or tribunal which involve the possibility of materially and
adversely affecting the properties, business, prospects or
condition (financial or otherwise) of the Company.
(c) The issuance and sale of the Restricted Common Stock and
compliance by the Company with all of the provisions of this
Agreement are within the corporate powers of the Company and have
been duly authorized by all proper corporate action on the part
of the Company and will not (i) conflict with or result in any
breach of any of the terms, conditions or provisions of, or
constitute a default under the Articles of Incorporation of the
Company or the Bylaws of the Company, (ii) conflict with or
result in any breach of any of the terms, conditions or
provisions of, or constitute a default under or give any party
the right to terminate or accelerate performance under any other
agreement or instrument to which the Company is a party (iii)
require consent under any other contract to which the Company is
a party, (iv) result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company
pursuant to the terms of any other contract to which the Company
is a party or (v) conflict with any provision of any applicable
judgment, decree, order, statute, rule, or regulation of any
court or any public, governmental or regulatory agency or body
having jurisdiction over the Company.
2
<PAGE>
(d) This Agreement is a valid and binding agreement of the
Company and is enforceable against the Company in accordance with
the terms hereof, except as such enforceability may be affected
by applicable bankruptcy laws and equitable remedies.
(e) The authorized capital stock of the Company consists of
5,000,000 shares of preferred stock (preferred stock) and
40,000,000 shares of common stock. As of the date hereof, 200
shares of its Series F Convertible Preferred Stock are
outstanding. This preferred stock is convertible into common
stock initially at a conversion price equivalent to $14.07 per
share of common stock. If the Company's common stock does not
trade at prices higher than $14.07 per share over a period of
time, the conversion price will be adjusted downward on April 24,
1999 (or sooner if the Company issues common stock at less than
$14.07 per share) and quarterly thereafter. As of June 9, 1998,
22,900,350 shares of voting common stock are outstanding. As of
the date hereof, 4,497,749 stock options issued pursuant to the
Company's stock option plans and two (2) warrants to purchase a
total of 2,051,281 shares of voting stock are outstanding. Up to
6,180,000 shares of common stock may be issued under the
Company's stock option plans. Except as set forth above, there
are no other options, warrants, conversion privileges, preemptive
rights, or rights of first refusal granted by the Company in
favor of any other person presently outstanding or in existence
to purchase or acquire any of the authorized but unissued Common
Stock of the Company, other than any of such items granted
pursuant to this Agreement. The Company has provided to
Purchaser copies of its currently in effect Articles of
Incorporation and Bylaws, its Form 10-K for the year ended
December 31, 1997, its 1997 Annual Report, its Proxy statement
dated April 27, 1998 and its Form 10-Q for the quarter ended
March 31, 1998. The Company warrants that the information
contained in such documents as updated and supplemented prior to
the date of the Closing is true and correct and when taken as a
whole does not omit a fact necessary to make the information
contained therein in light of the circumstance under which the
documents were made (taking into account, without limitation, the
type of transaction contemplated by this Agreement and the
sophistication and nature of the Purchaser), not misleading. The
Company acknowledges that the Purchaser is relying on the written
documentation provided by the Company to Purchaser as described
above in making its decision to purchase the Restricted Common
Stock.
(f) Since March 31, 1998, except for the sale of 200 shares of
Series F Convertible Preferred Stock for $10 million, there has
not been any change in the assets, liabilities, financial
condition or operations of the Company other than changes in the
ordinary course of business, none of which individually or in the
aggregate have had a material adverse affect on such assets,
liabilities, financial condition or operations of the Company.
3
<PAGE>
2.02 REPRESENTATIONS OF THE PURCHASER. The Purchaser represents and
warrants as follows:
(a) It is the intent of the Purchaser that its purchase of the
Restricted Common Stock contemplated by this Agreement shall constitute a
transaction exempt from registration under the Securities Act of 1933, as
amended (the "Securities Act") and any applicable state securities laws.
(b) Purchaser will not offer or sell any Restricted Common Stock
except pursuant to an effective registration statement under the Securities
Act or in transactions which do not require registration under the
Securities Act.
(c) Purchaser is a corporation duly organized and validly existing
under the laws of the State of California is in good standing under such
laws and has all requisite corporate powers and authority to enter into
this Agreement.
(d) On or prior to the date of the initial Closing, Purchaser will
have taken all action necessary for the authorization, execution, delivery
and performance of this Agreement.
(e) Purchaser has (i) reviewed this Agreement, and the written
statements, and documents, delivered to Purchaser as described in Section
2.01(e); and, (ii) received satisfactory response from the Company as to
matters about which Purchaser has inquired relating to this Agreement, and
other documents described in Section 2.01(e) and relating to the Company's
business condition, prospects and plans as necessary to evaluate the merits
and risks of acquiring the Restricted Common Stock. Purchaser has informed
the Company that Purchaser is relying on all such information and documents
in making its decision to purchase the Restricted Common Stock.
(f) Purchaser (i) has had the risks involved in the investment
represented by this Agreement explained; (ii) has knowledge and experience
in financial and business matters to evaluate the merits and risks of the
investment represented by this Agreement; (iii) is able to bear the
economic risk of the investment represented by this Agreement (including a
complete loss of this investment); and (iv) has determined that this
investment is suitable for Purchaser in light of Purchaser's financial
circumstances and available investment opportunities.
(g) Purchaser is acquiring the Restricted Common Stock for its own
account and with its general assets for the purpose of investment and not
with a view to the resale, transfer or distribution thereof, and has no
present intention of selling, transferring, negotiating or otherwise
disposing of any Restricted Common Stock. Notwithstanding anything in this
Agreement to the contrary, it is agreed that the Purchaser shall have the
right to assign or transfer the Restricted Common Stock to its Affiliates
at any time without the consent of the Company.
4
<PAGE>
3. NON-DISCLOSURE. Except as agreed to by the parties neither the Company nor
the Purchaser shall release any information to any third party with respect to
any of the terms of this Agreement without the prior written consent of the
other, which consent shall not unreasonably be withheld. This prohibition
includes, but is not limited to, press releases, promotional materials and
discussions with the media. If the Company determines that it is required by
law to release information to any third party regarding the terms of this
Agreement, it shall notify the Purchaser of this fact prior to releasing the
information. The notice to the Purchaser shall include the text of the
information proposed for release. The Purchaser shall have the right to confer
with the Company regarding the necessity for the disclosure and the text of the
information proposed for release.
4. COMPLIANCE WITH SECURITIES ACT
4.01 CERTAIN DEFINITIONS. As used herein, the following terms shall
have the following respective meanings:
(a) COMMISSION. Shall mean the Securities and Exchange Commission,
or any other Federal agency at the time administering the Securities Act or
the Trust Indenture Act, as the case may be.
(b) SECURITIES ACT. Shall mean the Securities Act of 1933, as
amended, or any similar Federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the
relevant time.
(c) EXCHANGE ACT. Shall mean the Securities Exchange Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the
relevant time.
(d) RESTRICTED COMMON STOCK. Shall mean the Common Stock of the
Company issued and sold pursuant to this Agreement which by the terms
hereof is required to bear the legend specified in Section 4.02 hereof.
4.02 RESTRICTION OF TRANSFERABILITY; LEGEND. Shares of Restricted
Common Stock shall not be resold or transferred unless registered under the
Securities Act or unless an exemption from registration is available for such
sale or transfer. The conditions specified below are intended to ensure
compliance with the provisions of the Securities Act in respect of any transfer
of stock. Each certificate for shares of Restricted Common Stock shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
The shares evidenced by this certificate have not been
registered under the Securities Act of 1933, as
amended, and may not be sold or transferred in the
absence of such registration or an exemption therefrom
under said Securities Act and the transfer of such
5
<PAGE>
shares is subject to terms and conditions specified in
the Common Stock Purchase Agreement dated as of June
11, 1998, between the Company and Agouron
Pharmaceuticals, Inc.
If shares of Restricted Common Stock evidenced by certificates bearing a legend
required by this Section 4.02 are sold in accordance with a registration
statement which has become effective under the Securities Act, or if the Company
shall receive an opinion of its counsel to the effect that any legend required
under this Section 4.02 is not, or is no longer, necessary or required with
respect to such shares (including, without limitation, because of the
availability of the exemption afforded by Rule 144 of the General Rules and
Regulations of the Commission), the Company shall, or shall instruct its
transfer agent and registrar to, remove such legend or issue new certificates
without such legend in lieu thereof.
4.03 INFORMATION REQUIREMENTS. The Company agrees to:
(a) Make and keep public information available, as such term is
understood and defined in Commission Rule 144 and Rule 144A, under
the Securities Act;
(b) Use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act; and
(c) Furnish to any holder of Restricted Common Stock a copy of the
most recent annual or quarterly report of the Company, and such other
publicly available reports and documents of the Company, so that such
holder may avail itself of any rule or regulation of the Commission
allowing it to sell any such securities without registration.
4.04 PIGGY-BACK REGISTRATION RIGHTS. If the Company before January
15, 2001 contemplates a public offering of shares of its Common Stock to be
registered under the Securities Act, the Company shall so notify the Purchaser
in writing of its intention to do so, at least twenty (20) days prior to the
filing of a registration statement for such offering. If Purchaser gives
written notice to the Company, within ten (10) days of receipt of the notice
from the Company, of Purchaser's desire to have its Restricted Common Stock
included in such registration statement, Purchaser may, subject to the
provisions of this Section 4.04, have its Restricted Common Stock included in
such registration statement. The Company shall bear all expenses in connection
with the registration and sale of any such Restricted Common Stock, other than
the fees or disbursements of any special counsel which the Purchaser may retain
in connection with the registration of its Restricted Common Stock or any
portion of the underwriter's commission, discounts and expenses attributable to
the Restricted Common Stock being offered and sold by the Purchaser.
Notwithstanding the foregoing, if the managing underwriter of any such offering
determines that the number of shares proposed to be sold by the Company, by
other shareholders having piggy-back rights, and/or by the Purchaser is greater
than the number of shares which the underwriter believes feasible to sell at the
time, at the price and upon the terms approved by the Company, then the
6
<PAGE>
number of shares which the underwriter believes may be sold shall be
allocated for inclusion in the registration statement in the following order
of priority: (i) shares being offered by the Company; and (ii) pro rata
among the other shareholders and the Purchaser, based on the number of shares
of Common Stock each shareholder requested to be registered. The Company
shall have the right to designate the managing underwriter in respect of a
public offering pursuant to this Section 4.04.
4.05 ADDITIONAL COVENANTS CONCERNING SALE OF SHARES.
(a) The Company will notify the Purchaser of the effectiveness of
any registration statement in which Purchaser has exercised
registration rights granted pursuant to the terms of Section 4.04,
together with a list of the jurisdictions where the Company has
qualified or is exempt from registration under applicable state
securities laws.
(b) The Company will prepare and file with the Commission such
amendments and supplements to any registration statement filed
pursuant to the terms of Section 4.04 (and any prospectus used in
connection with such registration statement) as may be necessary to
comply with the provisions of the Securities Act with respect to the
sale of Restricted Common Stock by the Purchaser.
(c) The Company will furnish to the Purchaser a reasonable number
of copies of the prospectus used in connection with a registration
statement filed pursuant to the terms of Section 4.04, including a
preliminary prospectus, which prospectus conforms to the requirements
of the Securities Act, and such other documents as the Purchaser may
reasonably request, in order to facilitate the disposition of the
Purchaser's Restricted Common Stock.
(d) In connection with any registration statement referred to in
Section 4.04 of this Agreement, Purchaser will furnish to the
Company such information as the Company may reasonably require
from Purchaser for inclusion in the registration statement (and
the prospectus included therein).
(e) The Company's obligations under Section 4.04 shall be
conditioned upon Purchaser executing and delivering to the
Company its agreement, in a form satisfactory to counsel for
the Company, that it will comply with all applicable provisions
of the Securities Act, the Exchange Act, the securities acts
of applicable states and any rules and regulations promulgated
under such acts and will furnish to the Company information
about sales made in such public offering.
4.06 INDEMNIFICATION
In the event any of the Restricted Common Stock of Purchaser is included in
a registration statement under Section 4.04 of this Agreement:
7
<PAGE>
(a) To the extent permitted by law, the Company will indemnify and
hold harmless the Purchaser and its Affiliates and their respective
officers, directors and employees, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state 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 (hereinafter sometimes collectively referred to as
a "Violation(s)"): (i) any untrue statement or alleged untrue statement of
a material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto; (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,
any state securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law; and the
Company will reimburse each such indemnified party for any legal or other
expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this Section 4.06 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 or delayed),
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 any such indemnified party.
(b) To the extent permitted by law, the Purchaser will indemnify and
hold harmless the Company and its Affiliates and their respective officers,
directors and employees against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the Securities
Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any Violations, 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 Purchaser and its
Affiliates and their respective officers, directors and employees to the
Company expressly for use in connection with such registration; and the
Purchaser will reimburse each such indemnified party for any legal or other
expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this Section 4.06 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 Purchaser, which consent shall not be unreasonably withheld or delayed.
8
<PAGE>
(c) Promptly after receipt by an indemnified party under this Section
4.06 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section
4.06, notify the indemnifying party in writing of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to
the extent the indemnifying party so desires, to assume the defense thereof
with counsel mutually satisfactory to the parties.
5. MISCELLANEOUS
5.01 EXPENSES; FINDERS FEES. Neither party shall pay expenses and
finder fees for or to the other in connection with this transaction. Each party
agrees to indemnify and hold the other party harmless from any liability for any
commission or compensation in the nature of a finder's fee to any broker or
other person (and the costs and expenses of defending against such liability or
asserted liability) claiming to have been hired or engaged by the party.
5.02 REPLACEMENT OF CERTIFICATES FOR RESTRICTED COMMON STOCK. Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of any certificate evidencing any Restricted
Common Stock, the Company will execute, register and deliver, in lieu thereof, a
new certificate for an equal number of shares of Restricted Common Stock. In
the case of loss, theft or destruction of a certificate, at the election of the
Company, the Purchaser may be required to provide an indemnity reasonably
satisfactory to the Company or to post a surety bond in an amount equal to the
value of the shares represented by the new certificate.
5.03 NOTICE. Any notice required to be given under the terms of this
Agreement shall be in writing, and shall be given in person, transmitted by
telecopier, e-mail or similar electronic communication, delivered by a
recognized overnight delivery service such as Federal Express or sent by mail
(certified or registered or air mail for addresses outside of the country of
origin), return receipt requested, postage prepaid and addressed to the Company
at 5935 Darwin Court, Carlsbad, California 92008, or such other address as the
Company may designate to Purchaser in writing and to the Purchaser, at the
address appearing at the beginning of this Agreement or such other address as
Purchaser may designate to the Company in writing. Except as otherwise provided
herein, any notice so given shall be deemed delivered upon the earlier of (i)
actual receipt; (ii) receipt by sender of confirmation if telecopied or sent by
e-mail or similar electronic communication; (iii) two business days after
delivery to such overnight delivery service; or (iv) five business days after
deposit in the mail.
5.04 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
parties and their respective successors and assigns.
5.05 SURVIVAL OF REPRESENTATIONS, ETC. All covenants, representations
and warranties made by the parties herein shall survive the Closings and the
delivery of this Agreement and the shares of Restricted Common Stock purchased
hereunder.
9
<PAGE>
5.06 TERMINATION. Purchaser's obligation to purchase Restricted
Common Stock under this Agreement shall terminate with respect to any purchase
obligations whose purchase dates under Paragraph 1.02 occur after Purchaser has
elected to terminate, in its entirety, all of Purchaser's rights and obligations
under the Letter of Intent ("LOI") dated June 11, 1998 and the Definitive
Agreement (as defined in the LOI) between the parties.
5.07 SEVERABILITY. Should any part of this Agreement for any reason
be declared invalid, such decision shall not affect the validity of any
remaining portion, which remaining portion shall remain in force and effect as
if this Agreement had been executed with the invalid portion thereof eliminated
and it is hereby declared the intention of the parties hereto that they would
have executed the remaining portion of this Agreement without including therein
any such part, parts, or portion which may, for any reason, be hereafter
declared invalid.
5.08 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with, and governed by, the laws of the State of California without
regard to its conflict of law provisions.
5.09 CAPTIONS, FORM OF PRONOUNS. The descriptive headings of the
various sections or parts of this Agreement are for convenience only and shall
not affect the meaning or construction of any of the provisions hereof. All
pronouns used in this Agreement shall be deemed to include masculine, feminine
and neuter forms.
5.10 AGREEMENT IS ENTIRE CONTRACT. This Agreement constitutes the
entire contract between the parties hereto related to the purchase and sale of
Restricted Common Stock and no party shall be liable or bound to the other in
any manner by any warranties, representations or covenants except as
specifically set forth herein.
5.11 THIRD PARTIES. Nothing in this Agreement is intended to confer
upon any party, other than the parties hereto, and their respective permitted
successors and assigns, any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided herein.
5.12 AMENDMENT AND WAIVER. Any provision of this Agreement may be
amended and the observance of any term hereof may be waived (either
prospectively or retroactively and either generally or in a particular instance)
only with the written consent of the Company and the Purchaser.
5.13 AFFILIATES. References to Purchaser in this Agreement shall be
deemed to include direct or indirect subsidiaries of Purchaser. The term
"Affiliate" shall have the meaning defined in the LOI.
5.14 DISPUTE RESOLUTION. In the event of any controversy or claim arising
out of or relating to any provision of this Agreement, the parties shall try to
settle their differences amicably between themselves. Any unresolved disputes
arising between the parties relating to, arising out of or in any way connected
with this Agreement or any term or condition hereof, or the performance by
either party of its obligations hereunder, whether before or after termination
of this Agreement, shall be finally resolved by binding
10
<PAGE>
arbitration. Whenever a party shall decide to institute arbitration
proceedings, it shall give written notice to that effect to the other party.
The party giving such notice shall refrain from instituting the arbitration
proceedings for a period of sixty (60) days following such notice The
arbitration shall be held in San Diego, California according to the rules of
the American Arbitration Association ("AAA") applicable to commercial
securities matters of this nature. The arbitration shall be conducted by a
panel of three arbitrators appointed in accordance with AAA rules; provided,
however, that each party shall within thirty (30) days after the institution
of the arbitration proceedings appoint one arbitrator with the third
arbitrator being chosen by the other two arbitrators. If only one party
appoints an arbitrator, then such arbitrator shall be entitled to act as the
sole arbitrator to resolve the controversy. Any arbitration hereunder shall
be conducted in the English language and the arbitrator(s) shall apply the
law set forth in Section 5.08. All arbitrator(s) eligible to conduct the
arbitration must agree to render their opinion(s) within thirty (30) days of
the final arbitration hearing. The arbitrator(s) shall have the authority to
grant injunctive relief and specific performance, and to allocate between the
parties the costs of arbitration in such equitable manner as he determines;
provided, however, that each party shall bear its own costs and attorney's
and witness' fees. Notwithstanding the terms of this Section 5.14, a party
shall also have the right to obtain prior to the arbitrator(s) rendering the
arbitration decision, provisional remedies including injunctive relief or
specific performance from a court having jurisdiction thereof. The
arbitrator(s) will, upon the request of either party, issue a written opinion
of the findings of fact and conclusions of law and shall deliver a copy to
each of the parties. Decisions of the arbitrator(s) shall be final and
binding on all of the parties. Judgment on the award so rendered may be
entered in any court having jurisdiction thereof.
11
<PAGE>
The execution hereof by Purchaser shall constitute a contract between us
for the uses and purposes hereinabove set forth, and this Agreement may be
executed in any number of counterparts, each executed counterpart constituting
an original but all together only one agreement.
THE IMMUNE RESPONSE CORPORATION
By s/Dennis J. Carlo
---------------------------------
By s/Charles J.Cashion
---------------------------------
ACCEPTED AND AGREED TO AS OF THE DAY AND YEAR AFORESAID.
PURCHASER:
AGOURON PHARMACEUTICALS, INC
By s/Peter Johnson
---------------------------------
Peter Johnson
President and Chief Executive Officer
By s/Gary Friedman
---------------------------------
Gary Friedman
Secretary
12
