Document:

Exhibit 10.16

 

AMENDMENT TO

PRIMARY TELEVISION AFFILIATION AGREEMENT

 

TELEVISION
STATION:  WKBW – Buffalo, NY

 

American Broadcasting Companies, Inc. (“ABC or “we”) and Queen City
Broadcasting of New York, Inc. (“you”) hereby mutually agree upon the following
amendments to this Primary Television Affiliation Agreement between ABC and you
dated December 1, 1994, with respect to Television Station WKBW (the
“Primary Agreement”), effective June 30, 1995.

 

1.                                       The preamble of
the Primary Agreement is hereby deleted in its entirety and replaced with the
following:

 

The following shall constitute the agreement between American
Broadcasting Companies, Inc. (“ABC” or “we”) and Queen City Broadcasting of New
York, Inc. (“you”), in order that Television Station WKBW, Buffalo, New York
(“your station”) may continue to serve the public interest, convenience and
necessity.  We and you hereby mutually
agree upon the following plan of network cooperation which shall replace the
affiliation agreement between you and us dated February 8, 1990, as
amended.

 

You represent, warrant and agree that (i) pursuant to the prior consent
of the Federal Communications Commission (“FCC”) (FCC File No. BALCT-950516XG),
effective June 29, 1995, the broadcast license of your station was assigned
from you, an indirect wholly-owned subsidiary of Granite Broadcasting
Corporation (“Granite”), to WKBW-TV License, Inc. (“Licensee”), also an
indirect wholly-owned subsidiary of Granite; (ii) the sole purpose of Licensee
is to hold the broadcast license of your station; (iii) in the event your
stock, assets or the operating equipment and facilities of your station are
transferred or assigned to a third party (“Transferee”), all of the stock and
assets, including the broadcast license, of Licensee shall also be transferred
or assigned to Transferee so that the transaction shall result in the transfer
or assignment of your station as a single entity with all its licenses,
authorities, equipment and facilities necessary to operate a television
broadcast station, subject to prior approval of the FCC, ABC and any other
third party as required by FCC regulations, the terms of this Agreement as
herein amended or otherwise.  You
further agree that during the term of this Agreement as herein amended you
shall (i) cause Licensee to perform all acts necessary for you to perform fully
all of the obligations undertaken by you in this Agreement as herein amended,
and (ii) cause Licensee to forbear from acting in any manner forbidden by, or
inconsistent with, the terms of this Agreement as herein amended.

 

 

2.                                       Section II
of the Primary Agreement is hereby deleted in its entirety and replaced with
the following:

 

II.                                     TERM

 

This Agreement shall become effective at 3:00
AM, NYT, on the 30th day of June, 1995, and shall continue until 3:00 AM, NYT,
on the 30th day of June, 2005.

 

3.                                       Paragraph
(a)(i) of Schedule A of the Primary Agreement is hereby deleted in its
entirety and replaced with the following:

 

(i)                                     Your network station rate of
Five Thousand and Two ($5,002) Dollars or such other rate applicable pursuant
to the terms of Section III of the Agreement; by

 

Except as herein amended, the Primary Agreement shall remain in full
force and effect on all its same terms as therein stated.

 

AGREED TO:

 

	
  AMERICAN BROADCASTING

  COMPANIES, INC.

  	
   

  	
  QUEEN CITY BROADCASTING

  OF NEW YORK, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
  Date:

  	
  6/29/95

  	
   

  	
  Date:

  	
  6/29/95

  
							

 

2Exhibit 4.1

 

CERTIFICATE
OF DESIGNATION

 

OF
RIGHTS AND PREFERENCES

 

OF
SERIES A CONVERTIBLE PREFERRED STOCK

 

OF

 

THE
IMMUNE RESPONSE CORPORATION

 

 

I,
John M. Bonfiglio, President and Chief Executive Officer of The Immune Response
Corporation, a corporation organized and existing under the General Corporation
Law of the State of Delaware, do hereby certify:

 

That
pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of this corporation, the Board of Directors on December
19, 2003 adopted the following resolution creating a series of 835,561 shares
of Preferred Stock, par value of $.001 per share, designated as Series A
Convertible Preferred Stock:

 

RESOLVED,
that pursuant to the authority vested in the Board of Directors of this
corporation in accordance with the provisions of its Restated Certificate of
Incorporation, as amended, a series of Preferred Stock of the corporation be
and it hereby is created, and that the designation and amount thereof and the
powers, preferences and relative, participating, optional and other special
rights of the shares of such series, and the qualifications, limitations or
restrictions thereof are as follows:

 

1.             Designation and
Number of Shares; Dividends.

 

1.1.          Designation
and Number of Shares.  The shares of
such series shall be designated as “Series A Convertible Preferred Stock”
(“Series A Preferred Stock”).  The
number of shares constituting the Series A Preferred Stock shall be 835,561.

 

1.2.          Preferential
Dividends.  The holders of shares of
Series A Preferred Stock, in preference to the holders of Junior Securities (as
defined in Section 11 hereof), shall be entitled to receive cumulative
dividends on each share of Series A Preferred Stock at the rate of 9% per annum
on the Original Purchase Price (as defined in Section 11 hereof) thereof
(computed on a daily basis and on the basis of a 360-day year) (“Series A
Dividends”) from the date of issuance of such share until the earliest of
(i) July 7, 2006, (ii) the date on which the corporation redeems such
share of Series A Preferred Stock and (iii) the date on which such share
of Series A Preferred Stock is converted into shares of the corporation’s
common stock, par value $.0025 per share (“Common Stock”).  Series A Dividends shall accrue daily
(whether or not declared and whether or not there are profits, surplus or other
funds or assets of the corporation legally available for the payment of
dividends) but be payable in arrears upon any liquidation or dissolution of the
corporation or the conversion or redemption of shares of Series A Preferred
Stock and at such other times as may be determined by the corporation.  Series A Dividends may be paid, at the
option of the corporation, in cash and/or in shares of Common Stock of the corporation;
provided, however, that all Series A Dividends payable upon the
corporation’s

 

 

redemption of any share
of Series A Preferred Stock must be paid in cash.  If the corporation elects to pay, in whole or in part, Series A
Dividends in shares of Common Stock, the number of shares of Common Stock to be
issued in lieu of cash dividends shall be equal to:  (x) the dollar amount of such dividend divided by (y) a price
equal to the lesser of:  (i) the average
of the closing prices of the Common Stock for the ten (10) consecutive trading
days immediately preceding the respective dividend payment date and (ii) the
closing price of the Common Stock on the trading day immediately preceding such
respective dividend payment date.

 

1.3.          Priority.  No dividends or distributions, in cash,
securities and/or other property, shall be declared or paid or set apart for
payment on any Junior Securities, unless such dividend or distribution is
likewise declared, paid or set apart for payment on the Series A Preferred Stock
(a) in an amount equal to the dividend or distribution that would be payable if
the Series A Preferred Stock were converted into Common Stock on the date of
payment, declaration or distribution, if the dividend or distribution is in
respect of Common Stock or (b) at a rate proportionate to the relative per
share stated value of the Series A Preferred Stock and the recipient class or
series of stock, if the recipient class or series is other than in respect of
Common Stock.

 

2.             Liquidation.

 

2.1           Liquidation
Preference.  Upon any liquidation,
dissolution or winding up of the corporation (a “Liquidation”), each holder of
Series A Preferred Stock shall be entitled to be paid out of assets of the
corporation available for distribution to its stockholders in preference to any
distribution to holders of Junior Securities, an amount in cash equal to the
Original Purchase Price (as defined in Section 11 hereof) per share of Series A
Preferred Stock then held plus all accrued but unpaid Series A Dividends on
such share up to the date of the Liquidation (the “Liquidation Amount”).  A consolidation, merger, acquisition, or other corporate reorganization of the
corporation pursuant to which the stockholders of the corporation immediately
before such transaction own less than 50% of the voting power of the
corporation immediately after such transaction, or any other transaction in which all or substantially all of the
assets of the corporation are sold, transferred or otherwise disposed of shall
be deemed to be a Liquidation.

 

2.2           Pro Rata
Distribution.  If, upon a
Liquidation, the corporation’s assets available for distribution to its
stockholders are insufficient to permit payment to holders of Series A
Preferred Stock of the aggregate Liquidation Amount of their Series A Preferred
Stock, then the entire assets available for distribution shall be distributed
among holders of Series A Preferred Stock pro rata on the basis of the
aggregate Liquidation Amount of the Series A Preferred Stock held by each
holder before any payment is made to holders of Junior Securities.

 

2.3           Priority.  All of the preferential amounts to be paid
to the holders of the Series A Preferred Stock as to distributions upon a
Liquidation shall be paid or set apart for payment before the payment or setting
apart for payment of any amount for, or the distribution of any assets of the
corporation to, the holders of Junior Securities.

 

2

 

3.             Voting Rights.

 

3.1.          Ordinary
Voting.  Except as may otherwise be required
by law, the corporation’s Amended and Restated Certificate of Incorporation or
this Certificate of Designation, holders of Series A Preferred Stock shall vote
with holders of Common Stock as a single class on each matter submitted to a
vote of the corporation’s stockholders. 
Each share of Series A Preferred Stock shall have a number of votes
equal to 75% of the number of votes possessed by the number of shares of Common
Stock into which the share of Series A Preferred Stock is initially convertible.
Any fractional voting rights that result (after aggregating, in the case of
each holder of Series A Preferred Stock, all shares of Common Stock into which
all of the holders’ shares of Series A Preferred Stock could be converted)
shall be rounded upwards or downwards to the nearest whole number (with
one-half being rounded upwards).

 

4.             Conversion.

 

4.1.          Conversion
Procedure.

 

4.1.1.       At
any time and from time to time, a holder of Series A Preferred Stock may
convert all or any portion of the holder’s shares of Series A Preferred Stock
(and any accumulated dividends thereon) into a number of shares of Common Stock
computed by dividing (i) the Liquidation Amount of the share of Series A
Preferred Stock to be converted by (ii) the Conversion Price (as defined
in Section 4.2 hereof) then in effect.

 

4.1.2.       Each
conversion of Series A Preferred Stock shall be deemed to have been effected as
of the close of business on the date on which a certificate or certificates
representing the Series A Preferred Stock to be converted have been surrendered
for conversion at the corporation’s principal office (or at the office of the
transfer agent for the Series A Preferred Stock if the corporation has so
appointed such a transfer agent), together with written notice that such holder
elects to convert all or a specified portion of the Series A Preferred Stock
represented by such certificates into Common Stock.  Such notice shall specify whether the Common Stock to be issued
upon conversion shall be issued in such holder’s name or in the name of another
Person (as defined in Section 11 hereof). 
When the conversion has been effected, the rights of the converting
holder as such holder of the shares of Series A Preferred Stock so converted
shall cease, and the Person(s) in whose name(s) any certificate or certificates
for shares of Common Stock are to be issued upon the conversion shall be deemed
to have become the holder(s) of record of the shares of Common Stock
represented thereby.

 

4.1.3.       As
soon as practicable but in any event within ten (10) Business Days (as defined
in Section 11 hereof) after a conversion has been effected, the corporation
shall deliver to the converting holder: 
(i) a certificate or certificates representing the number of shares
of Common Stock issuable by reason of the conversion in such name(s) and such
denomination(s) as the converting holder has specified; and (ii) a
certificate representing any shares of Series A Preferred Stock that were
represented by the certificate or certificates delivered to the corporation in
connection with the conversion but that were not converted.

 

4.1.4.       The
issuance of a certificate or certificates for shares of Common Stock upon the
conversion of Series A Preferred Stock shall be made without charge to the
converting holder for

 

3

 

any issuance tax in
respect of the conversion or other cost incurred by the corporation in
connection with the conversion and the related issuance of shares of Common
Stock.

 

4.1.5.       Upon
conversion of each share of Series A Preferred Stock, the corporation shall
take all actions that may be necessary in order to ensure that the shares of
Common Stock issued as a result of the conversion are validly issued, fully
paid and nonassessable.  The corporation
shall at all times when the Series A Preferred Stock shall be outstanding,
reserve and keep available out of its authorized but unissued Common Stock, for
the purpose of effecting the conversion of the Series A Preferred Stock, such
number of its duly authorized shares of Common Stock as shall from time to time
be sufficient to effect the conversion of all outstanding shares of Series A
Preferred Stock.

 

4.1.6.       The
corporation shall not close its books against the transfer of Series A
Preferred Stock or of Common Stock issued or issuable upon conversion of Series
A Preferred Stock in any manner that interferes with the timely conversion of
Series A Preferred Stock.

 

4.1.7.       If
any fractional interest in a share of Common Stock would, except for the provisions
of this Section 4.1.7, be issuable upon any conversion of Series A
Preferred Stock, the corporation, in lieu of issuing the fractional share
otherwise issuable, may pay an amount in cash to the holder of the fractional
interest equal to the product of the (x) Market Price (as defined in Section 11
hereof) as of the date of conversion multiplied by (y) the fractional interest.

 

4.1.8.       Notwithstanding
any other provision of this Section 4, if a conversion of Series A
Preferred Stock is to be made in connection with a Corporate Change (as defined
in Section 11 hereof), a Change of Control (as defined in Section 11 hereof) or
any other similar transaction affecting the corporation and its capital stock,
the conversion may be conditioned, at the election of the converting holder,
upon the consummation of the Corporate Change or Change of Control or other
such similar transaction affecting the corporation and its capital stock, in
which event the conversion shall not be deemed to be effective until the Corporate
Change or Change of Control or other such similar transaction affecting the
corporation and its capital stock has been consummated.

 

4.2.          Conversion
Price.  The conversion price for
Series A Preferred Stock (the “Conversion Price”) shall initially be $1.4960
and shall be adjusted as follows:

 

	
  Months
  from July 7, 2003

  	
   

  	
  Conversion
  Price

  	
   

  
	
  0-12

  	
   

  	
  $

  	
  1.4960

  	
   

  
	
  13-15

  	
   

  	
  $

  	
  1.1968

  	
   

  
	
  16-18

  	
   

  	
  $

  	
  0.9973

  	
   

  
	
  19-21

  	
   

  	
  $

  	
  0.8549

  	
   

  
	
  22-24

  	
   

  	
  $

  	
  0.7480

  	
   

  
	
  25-27

  	
   

  	
  $

  	
  0.6649

  	
   

  
	
  28-30

  	
   

  	
  $

  	
  0.5984

  	
   

  
	
  31-33

  	
   

  	
  $

  	
  0.5440

  	
   

  
	
  34+

  	
   

  	
  $

  	
  0.4987

  	
   

  

 

4

 

In order to
prevent dilution of the conversion rights granted under Section 4.1 above,
the Conversion Price for Series A Preferred Stock shall be subject to
adjustment from time to time pursuant to Sections 4.3, 4.4, 4.5 and 4.6
hereof.

 

4.3.          Common
Stock Subdivision or Combination. 
If the corporation at any time subdivides (by a stock split, stock
dividend, recapitalization or otherwise) its outstanding shares of Common Stock
into a greater number of shares, the Conversion Price in effect immediately
prior to the subdivision shall be proportionately decreased; and if the
corporation at any time combines (by reverse stock split, recapitalization or
otherwise) its outstanding shares of Common Stock into a smaller number of
shares, the Conversion Price in effect immediately prior to the combination
shall be proportionately increased. Any adjustment of the Conversion Price
under this Section 4.3 shall become effective as and when the subdivision
or combination becomes effective.  A
subdivision or combination of Common Stock described in this Section 4.3
is referred to as a “Pro-Rata Stock Event.”

 

4.4.          Corporate
Change.  Prior (and as a condition)
to the consummation of any Corporate Change, the corporation shall make
appropriate provisions to ensure that each holder of Series A Preferred Stock
shall have the right to receive upon conversion of the holder’s Series A
Preferred Stock, in lieu of the shares of Common Stock that the holder
otherwise would have been entitled to receive upon conversion, the stock,
securities or assets that the holder would have received in connection with the
Corporate Change if the holder had converted the holder’s Series A Preferred
Stock immediately prior to the Corporate Change.  The corporation shall not effect any Corporate Change unless,
prior to the consummation of the Corporate Change, the successor corporation
(if other than the corporation) or the purchasing corporation, by written
instrument, undertakes the obligations of the corporation described in the
immediately preceding sentence and assumes the obligation to deliver to each
holder of Series A Preferred Stock such shares of stock, securities or assets
that the holder is entitled to receive in accordance with this Section 4.4.

 

4.5.          Anti-Dilution
Protection.

 

4.5.1.       If,
on or after the Initial Issue Date, the corporation issues or sells, or in
accordance with Section 4.6 is deemed to have issued or sold, any shares
of Common Stock for a consideration per share less than the Conversion Price in
effect immediately prior to the time of such issue or sale, then immediately
upon such issuance or sale the Conversion Price shall be reduced to a
Conversion Price determined by dividing (a) the sum of (x) the
product derived by multiplying the Conversion Price in effect immediately prior
to such issue or sale by the number of shares of Common Stock Deemed
Outstanding immediately prior to such issue or sale plus (y) the
consideration, if any, received by the corporation upon such issue or sale, by
(b) the number of shares of Common Stock Deemed Outstanding immediately
after such issue or sale.

 

4.5.2.       Notwithstanding
the foregoing and Section 4.6, there shall be no adjustment in the Conversion
Price as a result of:

 

(i)            the grant of Options
which are authorized to be granted under an Approved Stock Plan; provided,
however, that the foregoing exception to the anti-dilution provisions of
this Section 4.5 shall not apply to Options to the extent that

 

5

 

all such Options
represent in the aggregate more than ten (10%) percent of the number of shares
of Common Stock issued and outstanding (on a fully-diluted basis) immediately
prior to such grant; or

 

(ii)           the issuance of shares
of Common Stock (or Options) in connection with acquisitions, commercial
relationships and debt financings.

 

4.6.          Effect
on Conversion Price of Certain Events. 
For purposes of determining the adjusted Conversion Price under
Section 4.5, the following shall be applicable:

 

4.6.1.       If
the corporation in any manner grants or sells any Options, then the total
maximum number of shares of Common Stock issuable upon the exercise of such
Options or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options shall be
deemed to be outstanding and to have been issued and sold by the corporation at
the time of the granting or sale of such Options for such price per share. For
purposes of this paragraph the “price per share for which Common Stock is
issuable” shall be determined by dividing (A) the total amount, if any,
received or receivable by the corporation as consideration for the granting or
sale of such Options, plus the minimum aggregate amount of additional consideration
payable to the corporation upon exercise of all such Options, plus in the case
of such Options which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable to the corporation upon the
issuance or sale of such Convertible Securities and the conversion or exchange
thereof, less any consideration payable by the corporation to the holder of
such Options in connection with the exercise thereof, and in the case of such
Options that relate to Convertible Securities, less any consideration payable
by the corporation to the holder of such Convertible Securities in connection
with the exchange thereof, by (B) the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon the conversion
or exchange of all such Convertible Securities issuable upon the exercise of
such Options. No further adjustment of the Conversion Price shall be made when
Convertible Securities are actually issued upon the exercise of such Options or
when Common Stock is actually issued upon the exercise of such Options or the
conversion or exchange of such Convertible Securities.

 

4.6.2.       If
the corporation in any manner issues or sells any Convertible Securities, then
the maximum number of shares of Common Stock issuable upon conversion or
exchange of such Convertible Securities shall be deemed to be outstanding and
to have been issued and sold by the corporation at the time of the issuance or
sale of such Convertible Securities for such price per share. For the purposes
of this paragraph, the “price per share for which Common Stock is issuable”
shall be determined by dividing (A) the total amount received or
receivable by the corporation as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the corporation upon the conversion or
exchange thereof, less any consideration payable by the corporation to the
holder of such Convertible Securities in connection with the exchange thereof,
by (B) the total maximum number of shares of Common Stock issuable upon
the conversion or exchange of all such Convertible Securities. No further
adjustment of the Conversion Price shall be made when Common Stock is actually
issued upon the conversion or exchange of such Convertible Securities, and if
any such issue or sale of such Convertible Securities is made upon exercise of
any Options for which adjustments of the Conversion Price had been or are to be
made pursuant

 

6

 

to other provisions of
this Section 4.6, no further adjustment of the Conversion Price shall be
made by reason of such issue or sale.

 

4.6.3.       If
the exercise price provided for in any Options, the additional consideration,
if any, payable upon the conversion or exchange of any Convertible Securities
or the rate at which any Convertible Securities are convertible into or
exchangeable for Common Stock changes at any time, a corresponding number of
shares of Common Stock shall be deemed to have been issued (whether such
corresponding number is higher or lower than the number of shares of Common
Stock initially deemed to have been issued) and the Conversion Price in effect
at the time of such change shall be immediately adjusted to the Conversion
Price which would have been in effect at such time had any such Options or
Convertible Securities that are still outstanding provided for such changed
exercise price, additional consideration or conversion rate, as the case may be,
at the time initially granted, issued or sold and any subsequent adjustments to
the Conversion Price were based thereon. 
If such adjustment would result in an increase of the Conversion Price
then in effect, however, such adjustment shall not be effective until 30 days
after written notice thereof has been given by the corporation to all holders
of Series A Preferred Stock but in no event shall any such increase in the
Conversion Price cause the Conversion Price to be greater than it was
immediately prior to the issuance of the Option or Convertible Security in
question (after giving effect to any adjustments to the Conversion Price
occurring subsequent to such issuance). 
For purposes of this Section 4.6.3, if the terms of any Option or
Convertible Security that was outstanding as of the date of filing of this
Certificate of Designation are changed in the manner described in the
immediately preceding sentence, then such Option or Convertible Security and
the Common Stock deemed issuable upon exercise, conversion or exchange thereof
shall be deemed to have been issued as of the date of such change; but no such
change shall at any time cause the Conversion Price hereunder to be increased.

 

4.6.4.       Upon
the termination or expiration of any Option or the termination of any right to
convert or exchange any Convertible Security without the exercise of any such
Option or right, the Conversion Price then in effect hereunder shall be
adjusted immediately to the Conversion Price that would have been in effect at
the time of such expiration or termination had such Option or Convertible
Security, to the extent outstanding immediately prior to such expiration or
termination, never been issued and any subsequent adjustments to the Conversion
Price were based thereon.  If such
expiration or termination would result in an increase in the Conversion Price
then in effect, however, such increase shall not be effective until 30 days
after written notice thereof has been given to all holders of Series A
Preferred Stock, but in no event shall any such increase in the Conversion
Price cause the Conversion Price to be greater than it was immediately prior to
the issuance of the Option or Convertible Security question (after giving
effect to any adjustments to the Conversion Price occurring subsequent to such
issuance).  For purposes of this
Section 4.6.4, the expiration or termination of any Option or Convertible
Security that was outstanding as of the date of filing of this Certificate of
Designation shall not cause the Conversion Price hereunder to be adjusted
unless, and only to the extent that, a change in the terms of such Option or
Convertible Security caused it to be deemed to have been issued after the
Initial Issue Date.

 

4.6.5.       If
any Common Stock, Option or Convertible Security is issued or sold or deemed to
have been issued or sold for cash, the consideration received therefor shall be
deemed to be

 

7

 

the amount received by
the corporation therefor. If any Common Stock, Option or Convertible Security
is issued or sold for a consideration other than cash, the amount of the
consideration other than cash received by the corporation shall be the fair
value of such consideration, except where such consideration consists of securities,
in which case the amount of consideration received by the corporation shall be
the Market Price thereof as of the date of receipt. If any Common Stock, Option
or Convertible Security is issued to the owners of the non-surviving entity in
connection with any merger in which the corporation is the surviving
corporation, the amount of consideration therefor shall be deemed to be the
fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such Common Stock, Option or Convertible Security,
as the case may be.  In the event that
any Common Stock, Options or Convertible Securities are issued together with
other shares, securities or other assets of the corporation for consideration
which covers both, the consideration for the Common Stock, Options or
Convertible Securities, as the case may be, shall be the proportion of the
consideration so received that is fairly attributable to the Common Stock,
Options or Convertible Securities in question. 
The fair value of any consideration other than cash and securities and
the proportion of consideration where Common Stock, Options or Convertible
Securities are issued together with other shares, securities or other assets,
shall be determined in good faith by the Board of Directors of corporation.

 

4.6.6.       The
number of shares of Common Stock outstanding at any given time shall not
include shares owned or held by or for the account of the corporation or any
Subsidiary, but the transfer of any shares of Common Stock so owned or held to
a third party shall be considered an issue or sale of Common Stock.

 

4.6.7.       If
the corporation establishes a record date for the purpose of entitling the
holders of Common Stock (i) to receive a dividend or other distribution
payable in Common Stock, Options or in Convertible Securities or (ii) to
subscribe for or purchase Common Stock, Options or Convertible Securities, then
such record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the declaration
of such dividend or upon the making of such other distribution or the date of
the granting of such right of subscription or purchase, as the case may be.

 

4.7.          Notices
of Adjustment.  Within ten (10)
Business Days of each adjustment or readjustment of the Conversion Price
pursuant to this Section 4, the corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
furnish to each holder of Series A Preferred Stock a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. 
The corporation shall, upon the written request at any time of any holder
of Series A Preferred Stock, furnish or cause to be furnished to such holder a
similar certificate setting forth (i) such adjustments and readjustments, (ii)
the Conversion Price then in effect, and (iii) the number of shares of Common
Stock and the amount, if any, of other property that then would be received
upon the conversion of Series A Preferred Stock.  All adjustments made pursuant to this Section 4 shall be made to
the nearest one hundredth of a cent.

 

4.8.          Protection
of Conversion Rights.  In case any
event shall occur as to which the other provisions of this Section 4
hereof (i) are not strictly applicable, but the failure to make any reduction
to the conversion price of the Series A Preferred Stock would not, in the
reasonable

 

8

 

judgment of the Board of
Directors of the corporation, acting in good faith, fairly protect the
conversion rights of the holders of the Series A Preferred Stock in accordance
with the essential intent and principles of such provisions or (ii) if strictly
applied would not, in the reasonable judgment of the Board of Directors of the
corporation, acting in good faith, fairly protect the conversion rights of the
holders of the Series A Preferred Stock in accordance with the essential intent
and principles of such provisions, then, in each such case, the Board of
Directors of the corporation shall appoint a firm of independent certified
public accountants (which may be the
regular auditors of the corporation) of recognized national standing, which
shall give their opinion upon the adjustment, if any, to the Conversion Price
of the Series A Preferred Stock on a
basis consistent with the essential intent and principles of this Section 4,
necessary to preserve, without dilution, the conversion rights of all the
holders of such Series A Preferred Stock.  Upon receipt of such opinion,
the corporation shall promptly mail a copy thereof to the holders of the Series
A Preferred Stock and make the reductions
described therein.

 

4.9.          No
Impairment.  The corporation will
not, by amendment of this Certification of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the corporation but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 and in the taking of all
such action as may be necessary or appropriate in order to protect the
conversion rights of the holders of the Series A Preferred Stock against
impairment.

 

5.             Redemptions.

 

5.1.          Redemption
Request At Corporation’s Option.  At
any time after the Initial Issue Date, upon written notice of the proposed
redemption to all holders of Series A Preferred Stock given at least fifteen
(15) Business Days prior to the proposed redemption date (“Request Notice”),
the corporation shall have the right to request the redemption, in whole or in
part, of the outstanding shares of Series A Preferred Stock at a redemption
price per share of Series A Preferred Stock equal to the Liquidation Amount
thereof; provided, however, that the holder or holders of the
shares of Series A Preferred Stock sought to be redeemed by the corporation
may, in its or their sole discretion, reject, in writing within five (5)
Business Days following the Request Notice (the “Rejection Period”), the
corporation’s request.  The
corporation’s exercise of its redemption rights under this Section 5 shall
be subject to the conversion rights under Section 4 of each holder of
Series A Preferred Stock, who may exercise those rights at any time prior to
the redemption date.

 

5.2.          Payment
of Redemption Price.  For each share
of Series A Preferred Stock that is to be redeemed, the corporation shall be
obligated on the redemption date to pay to the holder, upon the holder’s
surrender at the corporation’s principal office of the certificate representing
the share to be redeemed, the full redemption price of the share in immediately
available funds.  If the funds of the
corporation legally available for the redemption of Series A Preferred Stock on
the redemption date are insufficient to redeem the total number of shares of
Series A Preferred Stock that the corporation has sought to redeem and are
accepted for redemption, those funds which are legally available shall be used
to redeem the maximum possible number of shares of Series A Preferred Stock pro
rata among the holders of the shares to be redeemed on the basis of the number
of shares to be redeemed which are held by each holder.

 

9

 

5.3.          Notice
of Corporation’s Redemption.  In the
event the corporation shall exercise its right to request redemption of shares
of Series A Preferred Stock and its request shall not have been rejected by the
holders thereof within the Rejection Period, notice of such redemption shall be
given to each holder of Series A Preferred Stock as provided in Section 10
hereof.  Such Notice shall state:  (i) the redemption date; (ii) the number of
shares of Series A Preferred Stock to be redeemed; (iii) the redemption price;
and (iv) the place or places where certificates for such shares are to be
surrendered for payment of the redemption price.  Notice having been given by the corporation as provided above,
unless the corporation shall default in the payment of the redemption price,
from and after the redemption date, dividends on the shares of Series A
Preferred Stock called for redemption shall cease to accrue, and all rights of
the holders thereof as stockholders of the corporation (except the right to
receive from the corporation the redemption price) shall cease.

 

6.             Restrictions and
Limitations.

 

6.1.          Restricted
Transactions.  As long as any shares
of Series A Preferred Stock remain outstanding, the corporation shall not,
directly or indirectly, including directly or indirectly through a Subsidiary,
take any of the following actions without the affirmative vote or written
consent of holders of at least 66.67% of the shares of Series A Preferred Stock
then outstanding:

 

6.1.1.       amend, alter, repeal or
restate this Certificate of Designation or the Restated Certificate of
Incorporation, as amended, or by-laws (whether by merger, consolidation or
otherwise) in any manner that would adversely alter or change the powers,
preferences, privileges or rights of Series A Preferred Stock or which
otherwise adversely affects the holders of the Series A Preferred Stock as a
class;

 

6.1.2.       authorize, issue or otherwise
create any shares of capital stock of the corporation with liquidation and/or
dividend or voting rights, preferences or privileges senior to or on a parity
with the Series A Preferred Stock;

 

6.1.3.       increase the number of
authorized shares of the Series A Preferred Stock;

 

6.1.4.       effect any recapitalization
of the capital stock of the corporation;

 

6.1.5.       effect any Liquidation;
and/or

 

6.1.6.       increase the number of shares reserved for
issuance under the Approved Stock Plan to an amount greater than ten (10%)
percent of the number of shares of Common Stock issued and outstanding (on an
as converted to Common Stock, fully-diluted basis).

 

7.             Registration and
Transfer.

 

7.1.          The
corporation shall keep at its principal office a register for the registration of
Series A Preferred Stock or, at its option, may appoint a transfer agent for
such registration.  The corporation or
such transfer agent, as the case may be, may deem and treat the registered
holder(s) of the Series A Preferred Stock as the absolute owner(s) thereof
(notwithstanding any

 

10

 

notation of ownership or
other writing on the Series A Preferred Stock certificates made by any Person)
for the purpose of any conversion or redemption thereof or any payment or
distribution to the holder(s) thereof, and for all other purposes, and the
corporation or transfer agent, as the case may be, shall not be affected by any
notice to the contrary other than pursuant to Section 7.2 hereof.  For the purpose of this Agreement, all
references herein to a holder of Series A Preferred Stock shall refer to a
registered holder of Series A Preferred Stock.

 

7.2.          Upon the
surrender of any certificate representing Series A Preferred Stock at the
corporation’s principal office, the corporation shall, at the request of the
record holder of the certificate, execute and deliver (at the corporation’s
expense) a new certificate or certificates in exchange representing in the
aggregate the number of shares of Series A Preferred Stock represented by the
surrendered certificate. Each new certificate shall be registered in the name
and represent the number of shares of Series A Preferred Stock requested by the
holder of the surrendered certificate and shall be substantially identical in form
to the surrendered certificate. Any transfer of Series A Preferred Stock shall
be subject, however, to any applicable contractual or other restrictions on
transfer and the payment of any applicable transfer taxes by the transferring
holder in the event of a transfer to a name other than the name of the
transferring holder.

 

8.             Replacement.

 

Upon
receipt of evidence reasonably satisfactory to the corporation (e.g., an
affidavit of the registered holder) of the ownership and the loss, theft,
destruction or mutilation of any certificate evidencing shares of Series A
Preferred Stock, and in the case of any such loss, theft or destruction, upon
receipt of indemnity reasonably satisfactory to the corporation, or, in the
case of any such mutilation, upon surrender of the mutilated certificate, the
corporation shall (at its expense) execute and deliver in replacement a new
certificate of like kind representing the number of shares of Series A
Preferred Stock represented by the lost, stolen, destroyed or mutilated
certificate and dated the date of the lost, stolen, destroyed or mutilated
certificate.

 

9.             Amendment and
Waiver.

 

No
amendment, modification (including additions) or waiver will be binding or
effective with respect to any provision of this Certificate of Designation
without the prior written consent of holders of not less than 66.67% of the
shares of Series A Preferred Stock outstanding at the time that the action is
taken. No change in the terms of this Certificate of Designation may be
accomplished by merger or consolidation of the corporation with another
corporation unless the corporation has obtained the prior affirmative vote or
written consent of holders of not less than 66.67% of the shares of Series A
Preferred Stock then outstanding.

 

10.          Definitions.

 

 “Affiliate” means, with respect to a
Person, (a) any director, executive officer, general partner, managing member
or other manager of such Person, (b) any other Person (other than a Subsidiary)
which directly or indirectly through one or more intermediaries, Controls, or
is Controlled by, or is under common Control with, such Person and (c) if such
Person is an individual, any member of the immediate family (including parents,
spouse and children) of such

 

11

 

individual,
any trust whose principal beneficiary is such individual or one or more members
of such individual’s immediate family and any Person who is Controlled by any
such member or trust.

 

“Approved Stock Plan”
means any stock option or stock-based incentive plan that is duly adopted by
the Board of Directors for issuance to employees, directors and other service
providers.

 

“Certificate of Incorporation”
means the Restated Certificate of Incorporation of the corporation, as amended,
and in effect on the date on which this Certificate of Designation is filed and
as it may be amended from time to time.

 

“Board” or “Board of Directors”
means the Board of Directors of the corporation as it exists from time to time.

 

“Business Day”
means any day other than a Saturday, Sunday or other day on which commercial
banks in New York City are authorized or required by law or executive order to
close.

 

“Change of
Control” means the occurrence of any of the following events: (a)
any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act) other than holders of the Series A Preferred Stock becomes
the “beneficial owner” (as defined in Rule 13d-3 and 13d-5 under the Exchange
Act) of more than 50% of the total voting stock of the corporation or (b) the
corporation consolidates with, or merges with or into, another person or sells,
assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any person, or any person consolidates with,
or merges with or into the corporation, in any such event pursuant to a
transaction in which the holders of the outstanding voting shares of the
corporation immediately prior to such transaction hold less than 50% of the
outstanding voting stock of the surviving or transferee company or its parent
company immediately after such transaction or immediately after such
transaction any “person” or “group” (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) other than holders of the Series A Preferred
Stock is the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of more than 50% of the total voting
stock of the surviving or transferee company or its parent company; provided,
however, that a “Change of Control” shall not include a transfer of all
or substantially all of the assets of the corporation to one or more wholly
owned subsidiaries or any merger or consolidation of the corporation
immediately after which holders of the outstanding voting stock of the
corporation immediately prior to such transaction hold 50% or more of the
outstanding voting stock of the surviving company or its parent company.

 

“Common Stock” is defined in Section 1.1
hereof.

 

“Common Stock
Deemed Outstanding” means, at any given time, (i) the number of
shares of Common Stock actually outstanding at such time, plus (ii) the
number of shares of Common Stock issuable upon conversion at such time of the
shares of Series A Preferred Stock, plus (iii) the number of shares of
Common Stock deemed to be outstanding pursuant to Sections 4.6.1 and
4.6.2, whether or not the Options or Convertible Securities are actually
exercisable or convertible at such time.

 

12

 

“Control”
means (i) the possession, directly or indirectly, of any other power to direct
or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.

 

“Conversion
Price” is defined in Section 4.2 hereof.

 

“Convertible
Securities” means any stock or securities directly or indirectly
convertible into or exchangeable for Common Stock.

 

“Corporate
Change” means any capital reorganization, reclassification,
consolidation, merger or sale of all or substantially all of the corporation’s
assets to another Person that is effected in such a way that holders of Common
Stock are entitled to receive (either directly or upon a subsequent liquidation
of the corporation) stock, securities or assets in respect of or in exchange
for Common Stock.

 

“Initial
Issue Date” means the first date on which any shares of Series A
Preferred Stock are issued hereunder.

 

“Junior
Securities” means the Common Stock and any class or series of
Preferred Stock of the corporation other than the Series A Preferred Stock.

 

“Liquidation” is defined in Section 2.1
hereof.

 

“Liquidation Amount” is defined in Section
2.1 hereof.

 

“Market Price”
of any security means the average (weighted by daily trading volume) of the
closing prices of such security’s sales on all securities exchanges on which
such security may be listed at the time, or, if there has been no sales on any
such exchange on any day, or, if on any day such security is not so listed, the
average of the representative bid and asked prices quoted in the NASDAQ System
as of 4:00 P.M., New York time, or, if on any day such security is not quoted
in the NASDAQ System, the average of the highest bid and lowest asked prices on
such day in the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated or any similar successor organization, in each
such case (except when the “Market Price” is being determined for purposes of
Section 5.2) averaged over a period of 20 days consisting of the day as of
which the “Market Price” is being determined and the 19 consecutive Business
Days prior to such day.  If at any time
such security is not listed on any securities exchange or quoted in the NASDAQ
System or the over-the-counter market, the “Market Price” shall be the fair
value thereof determined in good faith by the Board of Directors of the
corporation. Notwithstanding the preceding: (i) an Option which is granted
or repriced at an exercise price equal to the last reported sales price of a
share of Common Stock on the Nasdaq Stock Market on the date of grant or
repricing shall be considered to have been granted or repriced at the Market
Price on the date of grant or repricing; and (ii) shares of Common Stock
which are issued and sold in an underwritten registered public offering shall
be considered to have been issued and sold at the Market Price.

 

“Notice” is
defined in Section 10 hereof.

 

“Options”
means any rights, warrants or options to subscribe for or purchase Common Stock
or Convertible Securities.

 

“Original Purchase Price” means $5.984.

 

13

 

“Person”
means an individual, partnership, corporation, limited liability company,
association, trust, unincorporated organization, or other entity.

 

“Preferred
Stock” means each class or series of preferred shares or stock now existing or hereafter created by
the corporation.

 

“Pro Rata
Stock Event” is defined in Section 4.3 hereof.

 

“Series A
Dividends” is defined in Section 1.1 hereof.

 

“Series A
Preferred Stock” is defined in Section 1.1 hereof.

 

“Subsidiary” means,
as to any Person, (i) any corporation more than fifty percent (50%) of whose
stock of any class or classes having by the terms thereof ordinary voting power
to elect a majority of the directors of such corporation (irrespective of
whether or not at the time stock of any class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time owned such Person and/or one or more subsidiaries
of such Person and (ii) any partnership, limited liability company,
association, joint venture or other entity in which such Person and/or one or
more subsidiaries of such Person has more than a fifty percent (50%) equity
interest at the time or which such Person has more than 50% of the voting power
or otherwise has the right to control.

 

14

 

IN WITNESS, I have
executed and subscribed this Certificate of Designations and do confirm the
foregoing as true under the penalty of perjury this     day of
January, 2004.

 

	
   

  	
  THE IMMUNE RESPONSE
  CORPORATION,

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name: John M. Bonfiglio, Ph.D.

  
	
   

  	
   

  	
  Title: President and Chief Executive Officer

  

 

15

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