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Exhibit 4.6

CERTIFICATE OF DESIGNATION OF THE RELATIVE RIGHTS AND

PREFERENCES

OF THE

SERIES G CONVERTIBLE PREFERRED STOCK

OF

PRESCIENT APPLIED INTELLIGENCE, INC.

     The undersigned, the Chief Executive Officer of Prescient Applied Intelligence, Inc., a
Delaware corporation (the “Company”), in accordance with the provisions of the Delaware General
Corporation Law, does hereby certify that, pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the Company, the following resolution creating a
series of Series G Convertible Preferred Stock, was duly adopted on April 15, 2005:

     RESOLVED, that pursuant to the authority expressly granted to and vested in the Board of
Directors of the Company by provisions of the Certificate of Incorporation of the Company (the
“Certificate of Incorporation”), there hereby is created out of the shares of Preferred Stock, par
value $.001 per share, of the Company authorized in Article IV of the Certificate of Incorporation
(the “Preferred Stock”), a series of Preferred Stock of the Company, to be named “Series G
Convertible Preferred Stock,” consisting of Two Hundred Fifty (250) shares, which series shall have
the following designations, powers, preferences and relative and other special rights and the
following qualifications, limitations and restrictions:

     1. Designation and Rank. The designation of such series of the Preferred Stock shall
be the Series G Convertible Preferred Stock, par value $.001 per share (the “Series G Preferred
Stock”). The maximum number of shares of Series G Preferred Stock shall be Two Hundred Fifty (250)
shares. The Series G Preferred Stock shall rank prior to the common stock, par value $.001 per
share (the “Common Stock”) for purposes of liquidation preference, and to all other classes and
series of equity securities of the Company that by their terms do not rank senior to the Series G
Preferred Stock (“Junior Stock”). The Series G Preferred Stock shall be subordinate to and rank
junior to shares of the Company’s Series E Convertible Preferred Stock and to all indebtedness of
the Company now or hereafter outstanding.

     2. Dividends. Whenever the Board of Directors declares a dividend on the Common Stock
each holder of record of a share of Series G Preferred Stock, or any fraction of a share of Series
G Preferred Stock, on the date set by the Board of Directors to determine the owners of the Common
Stock of record entitled to receive such dividend (the “Record Date”) shall be entitled to receive,
out of any assets at the time legally available therefore, an amount equal to such dividend
declared on one share of Common Stock multiplied by the number of shares of Common Stock into which
such share, or such fraction of a share, of Series G Preferred Stock could be converted on the
Record Date.

 

 

     3. Voting Rights.

          (a) Class Voting Rights. The Series G Preferred Stock shall have the following class
voting rights. So long as any shares of the Series G Preferred Stock remain outstanding, the
Company shall not, without the affirmative vote or consent of the holders of at least three-fourths
(3/4) of the shares of the Series G Preferred Stock outstanding at the time, given in person or by
proxy, either in writing or at a meeting, in which the holders of the Series G Preferred Stock vote
separately as a class: (i) amend, alter or repeal the provisions of the Series G Preferred Stock so
as to adversely affect any right, preference, privilege or voting power of the Series G Preferred
Stock; or (ii) effect any distribution with respect to Junior Stock except that the Company may
effect a distribution on the Common stock if the Company makes a like kind distribution on each
share, or fraction of a share, of Series G Preferred Stock in an amount equal to the distribution
on one share of Common Stock multiplied by the number of shares of Common Stock into which such one
share, or such fraction of a share, of Series G Preferred Stock can be converted at the time of
such distribution.

          (b) General Voting Rights. Except with respect to transactions upon which the Series
G Preferred Stock shall be entitled to vote separately as a class pursuant to Section 3(a) above,
the Series G Preferred Stock shall have no voting rights. The Common Stock into which the Series G
Preferred Stock is convertible shall, upon issuance, have all of the same voting rights as other
issued and outstanding Common Stock of the Company.

     4. Liquidation Preference.

          (a) In the event of the liquidation, dissolution or winding up of the affairs of the Company,
whether voluntary or involuntary, after payment or provision for payment of the debts and other
liabilities of the Company, the holders of shares of the Series G Preferred Stock then outstanding
shall be entitled to receive, out of the assets of the Company, whether such assets are capital or
surplus of any nature, an amount equal to $10,000 per share (the “Liquidation Preference Amount”)
of the Series G Preferred Stock before any payment shall be made or any assets distributed to the
holders of the Common Stock or any other Junior Stock. If the assets of the Company are sufficient
to pay in part, but are not sufficient to pay in full, the Liquidation Preference Amount payable to
the holders of outstanding shares of the Series G Preferred Stock and any series of preferred stock
or any other class of stock on a parity, as to rights on liquidation, dissolution or winding up,
with the Series G Preferred Stock, then all of said assets available to pay a part of the
Liquidation Preference Amount to the holders of the outstanding shares of Series G Preferred Stock
and the other classes of stock on a parity as to rights on liquidation, dissolution or winding up,
will be distributed among the holders of the Series G Preferred Stock and the other classes of
stock on a parity with the Series G Preferred Stock, if any, ratably in accordance with the
respective amounts that would be payable on such shares if all amounts payable thereon were paid in
full. The liquidation payment with respect to each outstanding fractional share of Series G
Preferred Stock shall be equal to a ratably proportionate amount of the liquidation payment with
respect to each outstanding share of Series G Preferred Stock. All payments for which this Section
4(a) provides shall be in cash, property (valued at its fair market value as determined by an
independent appraiser reasonably acceptable to the holders of a majority of the Series G Preferred
Stock), or a combination thereof; provided,

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however, that no cash shall be paid to holders of Junior Stock unless each holder of
the outstanding shares of Series G Preferred Stock has been paid in cash the full Liquidation
Preference Amount to which such holder is entitled as provided herein. After payment of the full
Liquidation Preference Amount to which each holder is entitled, such holders of shares of Series G
Preferred Stock will not be entitled to any further participation as such in any distribution of
the assets of the Company.

          (b) A consolidation or merger of the Company with or into any other corporation or
corporations, or a sale of all or substantially all of the assets of the Company, or the
effectuation by the Company of a transaction or series of transactions in which more than 50% of
the voting shares of the Company is disposed of or conveyed, shall not be deemed to be a
liquidation, dissolution, or winding up within the meaning of this Section 4. In the event of the
merger or consolidation of the Company with or into another corporation, the Series G Preferred
Stock shall maintain its relative powers, designations and preferences provided for herein and no
merger shall result inconsistent therewith.

          (c) Written notice of any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, stating a payment date and the place where the distributable amounts
shall be payable, shall be given by mail, postage prepaid, no less than forty-five (45) days prior
to the payment date stated therein, to the holders of record of the Series G Preferred Stock at
their respective addresses as the same shall appear on the books of the Company.

     5. Conversion. The holder of Series G Preferred Stock shall have the following
conversion rights (the “Conversion Rights”):

          (a) Right to Convert. At any time on or after the Issuance Date, the holder of any
such shares of Series G Preferred Stock may, at such holder’s option, subject to the limitations
set forth in Section 7 herein, elect to convert (a “Voluntary Conversion”) all or any portion of
the shares of Series G Preferred Stock held by such person into a number of fully paid and
nonassessable shares of Common Stock equal to the quotient of (i) the Liquidation Preference Amount
of the shares of Series G Preferred Stock being converted divided by (ii) the Conversion Price (as
defined in Section 5(d) below) then in effect as of the date of the delivery by such holder of its
notice of election to convert. The Company shall keep written records of the conversion of the
shares of Series G Preferred Stock converted by each holder. A holder shall be required to deliver
the original certificates representing the shares of Series G Preferred Stock upon any conversion
of the Series G Preferred Stock as provided in Section 5(b) below.

          (b) Mechanics of Voluntary Conversion. The Voluntary Conversion of Series G Preferred
Stock shall be conducted in the following manner:

               (i) Holder’s Delivery Requirements. To convert Series G Preferred Stock into full
shares of Common Stock on any date (the “Voluntary Conversion Date”), the holder thereof shall (A)
transmit by facsimile (or otherwise deliver), for receipt on or prior to

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5:00 p.m., New York time on such date, a copy of a fully executed notice of conversion in the
form attached hereto as Exhibit I (the “Conversion Notice”), to the Company, and (B) with
respect to the conversion of shares of Series G Preferred Stock held by any holder, such holder
shall surrender to a common carrier for delivery to the Company as soon as practicable following
such Conversion Date, but in no event later than six (6) business days after such date, the
original certificates representing the shares of Series G Preferred Stock being converted (or an
indemnification undertaking with respect to such shares in the case of their loss, theft or
destruction) (the “Preferred Stock Certificates”).

               (ii) Company’s Response. Upon receipt by the Company of a facsimile copy of a
Conversion Notice, the Company shall immediately send, via facsimile, a confirmation of receipt of
such Conversion Notice to such holder and the Company or its designated transfer agent (the
“Transfer Agent”), as applicable, shall, within three (3) business days following the date of
receipt by the Company of the certificate representing the shares of Series G Preferred Stock being
converted, (x) issue and deliver to the Depository Trust Company (“DTC”) account on the
holder’s behalf via the Deposit Withdrawal Agent Commission System (“DWAC”) as specified in
the Conversion Notice, registered in the name of the holder or its designee, for the number of
shares of Common Stock to which the holder shall be entitled, and (y) if the certificate so
surrendered represents more shares of Series G Preferred Stock than those being converted, issue
and deliver to the holder a new certificate for such number of shares of Series G Preferred Stock
represented by the surrendered certificate which were not converted.

               (iii) Dispute Resolution. In the case of a dispute as to the arithmetic calculation
of the number of shares of Common Stock to be issued upon conversion, the Company shall promptly
issue to the holder the number of shares of Common Stock that is not disputed and shall submit the
arithmetic calculations to the holder via facsimile as soon as possible, but in no event later than
two (2) business days after receipt of such holder’s Conversion Notice. If such holder and the
Company are unable to agree upon the arithmetic calculation of the number of shares of Common Stock
to be issued upon such conversion within one (1) business day of such disputed arithmetic
calculation being submitted to the holder, then the Company shall within one (1) business day
submit via facsimile the disputed arithmetic calculation of the number of shares of Common Stock to
be issued upon such conversion to the Company’s independent, outside accountant. The Company shall
cause the accountant to perform the calculations and notify the Company and the holder of the
results no later than seventy-two (72) hours from the time it receives the disputed calculations.
Such accountant’s calculation shall be binding upon all parties absent manifest error. The
reasonable expenses of such accountant in making such determination shall be paid by the Company,
in the event the holder’s calculation was correct, or by the holder, in the event the Company’s
calculation was correct, or equally by the Company and the holder in the event that neither the
Company’s or the holder’s calculation was correct. The period of time in which the Company is
required to effect conversions or redemptions under this Certificate of Designation shall be tolled
with respect to the subject conversion or redemption pending resolution of any dispute by the
Company made in good faith and in accordance with this Section 5(b)(iii).

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               (iv) Record Holder. The person or persons entitled to receive the shares of Common
Stock issuable upon a conversion of the Series G Preferred Stock shall be treated for all purposes
as the record holder or holders of such shares of Common Stock on the Conversion Date.

          (c) Mandatory Conversion.

               (i) Upon the Company’s written request a holder of Series G Preferred Stock shall advise the
Company in writing the number of shares of Common Stock that are beneficially owned (“Beneficially
Owned”, as defined in Section 13(d) of the Securities and Exchange Act of 1934 and the rules
promulgated thereunder) by such holder. If the shares of Common Stock Beneficially Owned by such
holder amount to less than 9.99% of the shares of Common Stock outstanding at such time, the
Company may, at its option, compel such holder, by written notice to such holder (the “Mandatory
Conversion Notice”), to convert such portion of the Series G Preferred Stock owned by him into so
many shares of Common Stock so that the total number of shares of Common Stock Beneficially Owned
by such holder after such conversion shall equal up to 9.99%, but not more, of the shares of Common
Stock outstanding after such conversion.

               (ii) As used herein, a “Mandatory Conversion Date” shall be the date when the Mandatory
Conversion Notice shall be deemed delivered pursuant to Section 5(i). The Mandatory Conversion
Date and the Voluntary Conversion Date collectively are referred to in this Certificate of
Designation as the “Conversion Date.”

               (iii) Each share of Series G Preferred Stock outstanding on the Mandatory Conversion Date
shall, automatically and without any action on the part of the holder thereof, convert into a
number of fully paid and nonassessable shares of Common Stock equal to the quotient of (i) the
Liquidation Preference Amount of the shares of Series G Preferred Stock outstanding on the
Mandatory Conversion Date divided by (ii) the Conversion Price in effect on the Mandatory
Conversion Date; provided, however, that the Company shall not be obligated to
issue the shares of Common Stock issuable upon conversion of any shares of Series G Preferred Stock
unless the Preferred Stock certificates representing such shares of Series G Preferred Stock are
either delivered to the Company or the holder notifies the Company that such Preferred Stock
certificates have been lost, stolen, or destroyed, and executes an agreement satisfactory to the
Company to indemnify the Company from any loss incurred by it in connection therewith. Upon the
occurrence of the automatic conversion of the Series G Preferred Stock pursuant to this Section 5,
the holders of the Series G Preferred Stock shall surrender the Preferred Stock certificates
representing the Series G Preferred Stock for which the Mandatory Conversion Date has occurred to
the Company and the Company shall deliver the shares of Common Stock issuable upon such conversion
(in the same manner set forth in Section 5(b)(ii)) to the holder within three (3) business days of
the holder’s delivery of the applicable Preferred Stock certificates. If the certificates of
Series G Preferred Stock so surrendered represent more shares of Series G Preferred Stock than
those being converted, the Company shall issue to the holder a

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new certificate for such number of Series G Preferred Stock represented by the surrendered
certificates which were not converted.

          (d) Conversion Price. The term “Conversion Price” shall mean $.50 per share, subject
to adjustment under Section 5(e) hereof.

          (e) Adjustments of Conversion Price.

               (i) Adjustments for Stock Splits and Combinations. If the Company shall at any time
or from time to time after the Issuance Date, effect a stock split of the outstanding Common Stock,
the Conversion Price shall be proportionately decreased. If the Company shall at any time or from
time to time after the Issuance Date, combine the outstanding shares of Common Stock, the
Conversion Price shall be proportionately increased. Any adjustments under this Section 5(e)(i)
shall be effective at the close of business on the date the stock split or combination occurs.

               (ii) Adjustments for Certain Dividends and Distributions. If the Company shall at any
time or from time to time after the Issuance Date, make or issue or set a record date for the
determination of holders of Common Stock entitled to receive a dividend or other distribution
payable in shares of Common Stock, then, and in each event, the Conversion Price shall be decreased
as of the time of such issuance or, in the event such record date shall have been fixed, as of the
close of business on such record date, by multiplying, as applicable, the Conversion Price then in
effect by a fraction:

                    (1) the numerator of which shall be the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of business on such record
date; and

                    (2) the denominator of which shall be the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of business on such record
date plus the number of shares of Common Stock issuable in payment of such dividend or
distribution.

               (iii) Adjustment for Other Dividends and Distributions. If the Company shall at any
time or from time to time after the Issuance Date, make or issue or set a record date for the
determination of holders of Common Stock entitled to receive a dividend or other distribution
payable in securities of the Company other than shares of Common Stock, then, and in each event, an
appropriate revision to the applicable Conversion Price shall be made and provision shall be made
(by adjustments of the Conversion Price or otherwise) so that the holders of Series G Preferred
Stock shall receive upon conversions thereof, in addition to the number of shares of Common Stock
receivable thereon, the number of securities of the Company which they would have received had
their Series G Preferred Stock been converted into Common Stock on the date of such event and had
thereafter, during the period from the date of such event to and including the Conversion Date,
retained such securities (together with any distributions

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payable thereon during such period), giving application to all adjustments called for during
such period under this Section 5(e)(iii) with respect to the rights of the holders of the Series G
Preferred Stock.

                    (iv) Adjustments for Reclassification, Exchange or Substitution. If the Common Stock
issuable upon conversion of the Series G Preferred Stock at any time or from time to time after the
Issuance Date shall be changed to the same or different number of shares of any class or classes of
stock, whether by reclassification, exchange, substitution or otherwise (other than by way of a
stock split or combination of shares or stock dividends provided for in Sections 5(e)(i), (ii) and
(iii), or a reorganization, merger, consolidation, or sale of assets provided for in Section
5(e)(v)), then, and in each event, an appropriate revision to the Conversion Price shall be made
and provisions shall be made so that the holder of each share of Series G Preferred Stock shall
have the right thereafter to convert such share of Series G Preferred Stock into the kind and
amount of shares of stock and other securities receivable upon reclassification, exchange,
substitution or other change, by holders of the number of shares of Common Stock into which such
share of Series G Preferred Stock might have been converted immediately prior to such
reclassification, exchange, substitution or other change, all subject to further adjustment as
provided herein.

                    (v) Adjustments for Reorganization, Merger, Consolidation or Sales of Assets.
If at any time or from time to time after the Issuance Date there shall be a capital reorganization
of the Company (other than by way of a stock split or combination of shares or stock dividends or
distributions provided for in Section 5(e)(i), (ii) and (iii), or a reclassification, exchange or
substitution of shares provided for in Section 5(e)(iv)), or a merger or consolidation of the
Company with or into another corporation, or the sale of all or substantially all of the Company’s
properties or assets to any other person (an “Organic Change”), then as a part of such Organic
Change an appropriate revision to the Conversion Price shall be made and provision shall be made so
that the holder of each share of Series G Preferred Stock shall have the right thereafter to
convert such share of Series G Preferred Stock into the kind and amount of shares of stock and
other securities or property of the Company or any successor corporation resulting from the Organic
Change. In any such case, appropriate adjustment shall be made in the application of the
provisions of this Section 5(e)(v) with respect to the rights of the holders of the Series G
Preferred Stock after the Organic Change to the end that the provisions of this Section 5(e)(v)
(including any adjustment in the Conversion Price then in effect and the number of shares of stock
or other securities deliverable upon conversion of the Series G Preferred Stock) shall be applied
after that event in as nearly an equivalent manner as may be practicable.

                    (vi) Record Date. In case the Company shall take record of the holders of its Common
Stock or any other Preferred Stock for the purpose of entitling them to subscribe for or purchase
Common Stock or Convertible Securities, then the date of the issue or sale of the shares of Common
Stock shall be deemed to be such record date.

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          (f) No Impairment. The Company shall not, by amendment of its Certificate 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 Company,
but will at all times in good faith, assist in the carrying out of all the provisions of this
Section 5 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 G Preferred Stock against impairment.
In the event a holder shall elect to convert any shares of Series G Preferred Stock as provided
herein, the Company cannot refuse conversion based on any claim that such holder or any one
associated or affiliated with such holder has been engaged in any violation of law, unless, an
injunction from a court, on notice, restraining and/or adjoining conversion of all or of said
shares of Series G Preferred Stock shall have been issued and the Company posts a surety bond for
the benefit of such holder in an amount equal to 130% of the Liquidation Preference Amount of the
Series G Preferred Stock such holder has elected to convert, which bond shall remain in effect
until the completion of arbitration/litigation of the dispute and the proceeds of which shall be
payable to such holder in the event it obtains judgment.

          (g) Certificates as to Adjustments. Upon occurrence of each adjustment or
readjustment of the Conversion Price or number of shares of Common Stock issuable upon conversion
of the Series G Preferred Stock pursuant to this Section 5, the Company at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to
each holder of such Series G Preferred Stock a certificate setting forth such adjustment and
readjustment, showing in detail the facts upon which such adjustment or readjustment is based. The
Company shall, upon written request of the holder of such affected Series G Preferred Stock, at any
time, furnish or cause to be furnished to such holder a like certificate setting forth such
adjustments and readjustments, the Conversion Price in effect at the time, and the number of shares
of Common Stock and the amount, if any, of other securities or property which at the time would be
received upon the conversion of a share of such Series G Preferred Stock. Notwithstanding the
foregoing, the Company shall not be obligated to deliver a certificate unless such certificate
would reflect an increase or decrease of at least one percent of such adjusted amount.

          (h) Issue Taxes. The Company shall pay any and all issue and other taxes, excluding
federal, state or local income taxes, that may be payable in respect of any issue or delivery of
shares of Common Stock on conversion of shares of Series G Preferred Stock pursuant thereto;
provided, however, that the Company shall not be obligated to pay any transfer
taxes resulting from any transfer requested by any holder in connection with any such conversion.

          (i) Notices. All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally or by facsimile or three (3) business days following
(x) being mailed by certified or registered mail, postage prepaid, return-receipt requested, or (y)
delivered to an express mail delivery service such as Federal Express, with written receipt by the
addressee required, in either case addressed to the holder of record at its

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address appearing on the books of the Company. The Company will give written notice to each
holder of Series G Preferred Stock at least twenty (20) days prior to the date on which the Company
closes its books or takes a record (I) with respect to any dividend or distribution upon the Common
Stock, (II) with respect to any pro rata subscription offer to holders of Common Stock or (III) for
determining rights to vote with respect to any Organic Change, dissolution, liquidation or
winding-up and in no event shall such notice be provided to such holder prior to such information
being made known to the public. The Company will also give written notice to each holder of Series
G Preferred Stock at least twenty (20) days prior to the date on which any Organic Change,
dissolution, liquidation or winding-up will take place and in no event shall such notice be
provided to such holder prior to such information being made known to the public.

          (j) Fractional Shares. No fractional shares of Common Stock shall be issued upon
conversion of the Series G Preferred Stock. In lieu of any fractional shares to which the holder
would otherwise be entitled, the Company shall pay cash equal to the product of such fraction
multiplied by the average of the Closing Bid Prices of the Common Stock for the five (5)
consecutive trading immediately preceding the Voluntary Conversion Date or Mandatory Conversion
Date, as applicable.

          (k) Reservation of Common Stock. The Company shall, so long as any shares of Series G
Preferred Stock are outstanding, reserve and keep available out of its authorized and unissued
Common Stock, solely for the purpose of effecting the conversion of the Series G Preferred Stock,
such number of shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all of the Series G Preferred Stock then outstanding.

          (l) Retirement of Series G Preferred Stock. Conversion of Series G Preferred Stock
shall be deemed to have been effected on the applicable Voluntary Conversion Date or Mandatory
Conversion Date. The Company shall keep written records of the conversion of the shares of Series
G Preferred Stock converted by each holder. A holder shall be required to deliver the original
certificates representing the shares of Series G Preferred Stock upon any conversion of the Series
G Preferred Stock represented by such certificates.

          (m) Regulatory Compliance. If any shares of Common Stock to be reserved for the
purpose of conversion of Series G Preferred Stock require registration or listing with or approval
of any governmental authority, stock exchange or other regulatory body under any federal or state
law or regulation or otherwise before such shares may be validly issued or delivered upon
conversion, the Company shall, at its sole cost and expense, in good faith and as expeditiously as
possible, endeavor to secure such registration, listing or approval, as the case may be.

     6. No Preemptive or Redemption Rights. Except as provided in Section 5 hereof no
holder of the Series G Preferred Stock shall be entitled to rights to subscribe for, purchase or
receive any part of any new or additional shares of any class, whether now or hereinafter
authorized, or of bonds or debentures, or other evidences of indebtedness convertible into or
exchangeable for shares of any class, but all such new or additional shares of any class, or any

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bond, debentures or other evidences of indebtedness convertible into or exchangeable for
shares, may be issued and disposed of by the Board of Directors on such terms and for such
consideration (to the extent permitted by law), and to such person or persons as the Board of
Directors in their absolute discretion may deem advisable. Except as provided in Section 5 neither
the Company nor the holder has the right to have the Company redeem the Series G Preferred Stock.

     7. Conversion Restriction. Notwithstanding anything to the contrary set forth in
Section 5 of this Certificate of Designation, at no time may a holder of shares of Series G
Preferred Stock convert shares of the Series G Preferred Stock if the number of shares of Common
Stock to be issued pursuant to such conversion would exceed, when aggregated with all other shares
of Common Stock owned by such holder at such time, the number of shares of Common Stock which would
result in such holder owning more than 9.99% of all of the Common Stock outstanding at such time;
provided, however, that upon a holder of Series G Preferred Stock providing the
Company with sixty-one (61) days notice (pursuant to Section 5(i) hereof) (the “Waiver Notice”)
that such holder would like to waive Section 7(a) of this Certificate of Designation with regard to
any or all shares of Common Stock issuable upon conversion of Series G Preferred Stock, this
Section 7(a) shall be of no force or effect with regard to those shares of Series G Preferred Stock
referenced in the Waiver Notice.

     8. Inability to Fully Convert.

          (a) Holder’s Option if Company Cannot Fully Convert. If, upon the Company’s receipt
of a Conversion Notice, or on the Mandatory Conversion Date, the Company cannot issue shares of
Common Stock for any reason, including, without limitation, because the Company (x) does not have a
sufficient number of shares of Common Stock authorized and available or (y) is otherwise prohibited
by applicable law or by the rules or regulations of any stock exchange, interdealer quotation
system or other self-regulatory organization with jurisdiction over the Company or its securities,
from issuing all of the Common Stock which is to be issued to a holder of Series G Preferred Stock
pursuant to a Conversion Notice or a Mandatory Conversion Notice, then the Company shall issue as
many shares of Common Stock as it is able to issue in accordance with such holder’s Conversion
Notice or a Mandatory Conversion Notice, and pursuant to Section 5(b)(ii) or 5(c)(iv) above, and
with respect to the unconverted Series G Preferred Stock (the “Unconverted Preferred Stock”) the
holder, solely at such holder’s option, can elect, at any time after receipt of notice from the
Company that there is Unconverted Preferred Stock, to void the holder’s Conversion Notice or the
Mandatory Conversion Notice as to the number of shares of Common Stock the Company is unable to
issue (the “Unissued Shares of Common Stock”) and retain or have returned, as the case may be, the
certificates for the shares of the Unconverted Preferred Stock.

     In the event a Holder shall elect to convert any shares of Series G Preferred Stock as
provided herein, the Company cannot refuse conversion based on any claim that such Holder or any
one associated or affiliated with such Holder has been engaged in any violation of law, violation
of an agreement to which such Holder is a party or for any reason whatsoever, unless,

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an injunction from a court, on notice, restraining and or enjoining conversion of all or any
of said shares of Series G Preferred Stock shall have issued.

          (b) Mechanics of Fulfilling Holder’s Election. The Company shall immediately send via
facsimile to a holder of Series G Preferred Stock, upon receipt of a facsimile copy of a Conversion
Notice from such holder which cannot be fully satisfied as described in Section 8(a) above, a
notice of the Company’s inability to fully satisfy such holder’s Conversion Notice (the “Inability
to Fully Convert Notice”). Such Inability to Fully Convert Notice shall indicate (i) the reason
why the Company is unable to fully satisfy such holder’s Conversion Notice and (ii) the number of
shares of Series G Preferred Stock which cannot be converted.

          (c) Pro-rata Conversion. In the event the Company within a period of ten days
receives Voluntary Conversion Notices from more than one holder of Series G Preferred Stock and the
Company can convert some, but not all, of the Series G Preferred Stock required to be converted as
a result of such Voluntary Conversion Notices, the Company shall convert from each holder of Series
G Preferred Stock electing to have Series G Preferred Stock converted within such ten day period,
an amount equal to the number of shares of Series B Preferred Stock such holder elected to have
converted in such ten day period multiplied by a fraction, the numerator of which shall be the
number of shares of Series B Preferred Stock such holder elected to have converted in such ten day
period and the denominator of which shall be the total number of shares of Series B Preferred Stock
all holders elected to have converted in such ten day period. The Company shall not convert any
Series B Preferred Stock pursuant to a Mandatory Conversion Notice until it shall have converted
all Series B Preferred Stock pursuant to any Voluntary Conversion Notice.

     9. Vote to Change the Terms of or Issue Preferred Stock. The affirmative vote at a
meeting duly called for such purpose, or the written consent without a meeting, of the holders of
not less than three-fourths (3/4) of the then outstanding shares of Series G Preferred Stock, shall
be required for any change to this Certificate of Designation or the Company’s Certificate of
Incorporation which would amend, alter, change or repeal any of the powers, designations,
preferences and rights of the Series G Preferred Stock.

     10. Lost or Stolen Certificates. Upon receipt by the Company of evidence satisfactory
to the Company of the loss, theft, destruction or mutilation of any Preferred Stock Certificates
representing the shares of Series G Preferred Stock, and, in the case of loss, theft or
destruction, of any indemnification undertaking by the holder to the Company and, in the case of
mutilation, upon surrender and cancellation of the Preferred Stock Certificate(s), the Company
shall execute and deliver new preferred stock certificate(s) of like tenor and date.

     11. Remedies, Characterizations, Other Obligations, Breaches and Injunctive
Relief. The remedies provided in this Certificate of Designation shall be cumulative and
in addition to all other remedies available under this Certificate of Designation, at law or in
equity (including a decree of specific performance and/or other injunctive relief), no remedy
contained herein shall

11

 

be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing
herein shall limit a holder’s right to pursue actual damages for any failure by the Company to
comply with the terms of this Certificate of Designation. Amounts set forth or provided for herein
with respect to conversion and the like (and the computation thereof) shall be the amounts to be
received by the holder thereof and shall not, except as expressly provided herein, be subject to
any other obligation of the Company (or the performance thereof). The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the holders of the Series
G Preferred Stock and that the remedy at law for any such breach may be inadequate. The Company
therefore agrees that, in the event of any such breach or threatened breach, the holders of the
Series G Preferred Stock shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach, without the necessity of showing economic loss and without any
bond or other security being required.

     12. Specific Shall Not Limit General; Construction. No specific provision contained
in this Certificate of Designation shall limit or modify any more general provision contained
herein. This Certificate of Designation shall be deemed to be jointly drafted by the Company and
all initial purchasers of the Series G Preferred Stock and shall not be construed against any
person as the drafter hereof.

     13. Failure or Indulgence Not Waiver. No failure or delay on the part of a holder of
Series G Preferred Stock in the exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or privilege.

     IN WITNESS WHEREOF, the undersigned has executed and subscribed this Amended Certificate and
does affirm the foregoing as true this 29th day of April, 2005.

	 	 	 	 	 
	 	PRESCIENT APPLIED INTELLIGENCE, INC.

 	 
	 	By:  	/s/ Stan Szczygiel
 	 
	 	 	Name:  	Stan Szczygiel 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

12

 

EXHIBIT I

PRESCIENT APPLIED INTELLIGENCE, INC.

CONVERSION NOTICE

Reference is made to the Certificate of Designation of the Relative Rights and Preferences of the
Series G Preferred Stock of Prescient Applied Intelligence, Inc. (the “Certificate of
Designation”). In accordance with and pursuant to the Certificate of Designation, the undersigned
hereby elects to convert the number of shares of Series G Preferred Stock, par value $.001 per
share (the “Preferred Shares”), of Prescient Applied Intelligence, Inc., a Delaware corporation
(the “Company”), indicated below into shares of Common Stock, par value $.001 per share (the
“Common Stock”), of the Company, by tendering the stock certificate(s) representing the share(s) of
Preferred Shares specified below as of the date specified below.

	 	 	 	 	 
	 

	 	Date of Conversion:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Number of Preferred Shares to be converted:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Stock certificate no(s). of Preferred Shares to be converted:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	The Common Stock have been sold: YES       NO      	 	 
	 
	 	 	 	 

Please confirm the following information:

	 	 	 	 	 
	 
	 	 	 	 
	

	 	Conversion Price:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Number of shares of Common Stock
to be issued:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	 
	 	Number of shares of Common Stock beneficially owned or deemed beneficially owned by the Holder
on the Date of Conversion determined in accordance with Section 16 of the Securities Exchange Act
of 1934, as amended: _________________________

Please issue the Common Stock into which the Preferred Shares are being converted and, if
applicable, any check drawn on an account of the Company in the following name and to the following
address:

	 	 	 	 	 
	 
	 	 	 	 
	

	 	Issue to:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Facsimile Number:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Authorization:	 	 
	

	 	 	 	 
	

	 	 	 	By:
	

	 	 	 	 
	

	 	 	 	Title:
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Dated:	 	 

13

 

PRICES ATTACHED

14exv10w1

 

Exhibit 10.1

April 29, 2005

Mr. Larry Harris

94 Annursnac Hill Road

Concord, MA 01742

Dear Larry:

I am pleased to extend a written offer of employment to you to join Progress Software Corporation
(“Progress Software” or “Company”) following the purchase of EasyAsk, Inc.’s assets.

As this letter is being provided to you prior to the close of the purchase, please note that this
offer is subject to the execution (no later than April 29, 2005) of an Asset Purchase Agreement by
and among Progress Development Corporation (a wholly owned subsidiary of Progress Software),
EasyAsk Inc. (“EasyAsk”), and Sigma Partners LLP            as Indemnification Representative      , and
the close of the purchase in accordance with the terms of said agreement (hereinafter referred to
as the “Acquisition”).

The offer of employment to you is as follows:

	 	1.  	Title, Manager and Service Date. Your title will be Vice President and General Manager,
EaskAsk Division and you will report to myself. Your employment with Progress Software will
commence upon the close date of the Acquisition; however, the Company will retain your
service date as recorded with EasyAsk.
	 
	 	2.  	Target Compensation. At the commencement of your employment with Progress Software,
your compensation will consist of a semi-monthly salary of $7,291.67, ($175,000 on an
annualized basis). You will participate in a fiscal year 2005 bonus program with an
annualized target incentive of $75,000, which yields a total target compensation of
$250,000 at 100% of plan. You will receive additional information regarding the bonus
program after you join. This bonus will be prorated from the close date of the Acquisition.
	 
	 	3.  	Stock Options. At the next meeting of the Board of Directors of Progress Software
Corporation, it will be recommended to the Compensation Committee of said Board that you
receive a grant of options to purchase 40,000 shares of common stock of the Company, at the
fair market value on the date of the grant. Further details on this grant will be provided
shortly after the date of the grant.
	 
	 	4.  	Benefits. Please note that none of the existing benefit plans of EasyAsk have been
assumed or carried forward as part of the Acquisition. As an employee of Progress Software,
you will be eligible to participate in our employee benefits plan, which includes Medical,
Dental, Vision, and Life Insurance, Long and Short Term Disability, a 401(k) plan, Employee
Stock Purchase Plan, paid vacations and holidays. Enclosed you will find a CD which will
provide you with an overview of the employee benefits provided by Progress Software.
Additionally, you will learn more about your employee benefits when you attend the Benefits
Orientation which will be scheduled shortly after the close of the Acquisition.

 

 

	 	5.  	EasyAsk Accrued Vacation Balance Carryover. Your entire accrued vacation balance at
EasyAsk as of the date of the close will be carried over to your employment with Progress
Software. Your ability to earn additional vacation time will be subject to the terms and
conditions of Progress Software’s vacation policy which is described on the CD referenced
above.
	 
	 	6.  	Retention Bonus. Subject to the terms and conditions of this letter, you will be
entitled to receive a retention bonus in the amount of $200,000 (less required deductions
and withholdings). Such retention bonus will be paid to you in one lump-sum payment as soon
as is practical following the one year anniversary of the close of the Acquisition, and as
part of the Company’s standard payroll, provided that the following conditions are
satisified:

	 	•  	You continue to be employed with the Company from the completion of the
Acquisition through the one year anniversary date of the Acquisition.
	 
	 	•  	You have not, at any time from the completion of the Acquisition through the
above-mentioned one year anniversary date, committed any material violation of the
Company’s employment policies or the enclosed Employee Proprietary Information,
Non-Compete and Confidentiality Agreement (“Employee Agreement”), or otherwise
engaged in any activities described in the definition of “Cause” set forth below.

	 	   	Notwithstanding the foregoing, the retention bonus payment will be paid to you in accordance
with the schedule described above even if you are no longer employed by the Company if your
employment is terminated as a result of your involuntary dismissal without Cause, provided
that you have not breached the terms and conditions of any severance agreement or any
surviving provisions of the enclosed Employee Agreement. The term “Cause” as used herein
shall mean conduct involving any of the following: (i) substantial and continuing violations
by you of your obligations as an employee of the Company after there has been delivered to
you a written demand for performance from the Company which describes the basis for the
Company’s belief that you have not substantially performed your duties, (ii) your material
violation of the Company’s employment policies or the Employee Agreement, or (iii) your
disloyalty, gross negligence, willful misconduct, dishonesty, fraud or breach of fiduciary
duty to the Company.
	 
	 	   	In consideration for your employment by the Company and the retention bonus payment
described herein, you agree to execute and perform under the Employee Agreement and the
enclosed letter agreement from EasyAsk (whereby you release EasyAsk and Progress Software,
and certain other parties as defined therein, of claims associated with your prior
employment with EasyAsk) (hereinafter the “Release”).

Please note that the enclosed Employee Agreement replaces the Employee Proprietary Information and
Confidentiality Agreement located on the enclosed CD and therefore you should disregard that
document on the CD. Please print and review the Code of Conduct Compliance Statement located on the
CD. As a condition of this offer, you are required to sign and return the Employee Agreement, the
Release, the Code of Conduct Compliance Statement, and a copy of this offer letter, by the deadline
specified below.

The Immigration and Reform and Control Act requires that all employers verify the employment
eligibility and identity of all new employees. Please complete the top section of the Employment
Eligibility Form, (located on the enclosed CD), and bring it with you, together with the
appropriate forms of identification, (found on page two of the Employment Eligibility Form), when
you report to work. You will not be able to begin employment with Progress Software if you fail to
comply with this requirement.

 

 

While we look forward to a mutually beneficial relationship, please note that your employment by
Progress Software will be at will, meaning that neither you nor we have entered into any contract
of continued employment. Please note that except as otherwise expressly provided in this letter or
the enclosed materials, no benefits or other employment obligations arising out of your prior
employment with EasyAsk will survive the termination of your employment with EasyAsk.

Please confirm your acceptance of this offer by:

	 	•  	Signing and faxing a copy of this offer letter, the Employee Agreement, the Release and
the Code of Conduct Compliance Statement to Cindy Swech at 781/280-4350 no later than the
end of business day today.
	 
	 	•  	Promptly return the original signed offer letter, the Employee Agreement, the Release
and the Code of Conduct Compliance Statement to Cindy Swech, in the pre-paid, self
addressed envelope included within the offer packet.

I am looking forward to having you join us and am confident that you will find this position to be
a challenging and rewarding one for you.

Sincerely,

Richard Reidy

President, DataDirect

Acceptance: 

	 	 	 
	Employee Signature:
	 	 
	

	 	 
	 
	 	 
	Employee Name (Print):
	 	 
	

	 	 
	 
	 	 
	Date:

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