Document:

Exhibit 4.2

 

AMENDED

CERTIFICATE OF DESIGNATION OF

PREFERENCES, RIGHTS AND LIMITATIONS

OF

10% CUMULATIVE CONVERTIBLE REDEEMABLE SERIES
B PREFERRED STOCK

OF

VERTICAL COMPUTER SYSTEMS, INC.

 

VERTICAL COMPUTER SYSTEMS,
INC. (the "Company"), a corporation organized and existing under the laws of the State of Delaware, does hereby certify:

 

That, pursuant to authority
conferred upon the Board of Directors by the Certificate of Incorporation of the Company, and pursuant to the provisions of Section
161, Delaware Statutes, said Board of Directors, by unanimous written consent effective as of April 1, 1993 and as amended June
1, 1993, duly adopted a resolution providing for the issuance of a series of 375,000 shares of 10% Cumulative Convertible Redeemable
Series B Preferred Stock, $.001 par value ("Preferred Stock"), which resolution is as follows:

 

RESOLVED, that pursuant to the authority
expressly granted and invested in the Board of Directors of this Company in accordance with the provisions of its Certifi-cate
of Incorporation, a series of preferred stock of the Company be and hereby is given the distinctive designa-tion of "10% Cumulative
Convertible Redeemable Series B Preferred Stock" (the "Preferred Stock"), said series to consist of 375,000 shares
of the par value $.001 per share non-voting preferred stock, of which the preferences and relative, participating, optional or
other special rights, and the qualifications, limitations or restrictions thereof shall be as follows:

 

     

     

    

 

1.             Dividends on Preferred
Stock.

 

(a) Except as hereinafter
provided, the holders of the Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors out of
funds for the Company legally available therefor, cash or common stock dividends at the annual rate of 10% per annum on March 15
and September 15 of each year. Dividends will accrue from the date of the issuance of the Preferred Stock pursuant to a Confidential
Private Placement Memorandum (the "Closing Date"). If the dividend on the Preferred stock for any dividend period shall
not have been paid or set apart in full for such Preferred Stock, the aggregate deficiency shall be cumulative and shall be fully
paid or set apart for payment before any dividend shall be paid or set apart for payment of any class of common stock of the Company.
Accumulation of dividends of the Preferred Stock shall not bear interest.

 

(b) At the sole option of
the Board of Directors, dividends may be paid in shares of common stock or the Preferred Stock based upon the then current conversion
ratio of such Convertible Preferred Stock as described in paragraph 2 hereof.

 

2.             Conversion of Preferred
Stock into Common Stock.

 

(a) Subject to redemption
by the Company as hereinafter described, the holder of record of any share or shares of Preferred Stock shall have the right, at
his option, to convert each said share or shares of Preferred Stock into 3.788 fully paid and non-assessable shares of the Company's
common stock, par value $.001 per share ("Common Stock").

 

(b) Any holder of a share
or shares of Preferred Stock desiring to convert such Preferred Stock into Common Stock shall surrender the certificate or certificates
representing the share or shares of Preferred Stock to be so converted, duly endorsed to the Company or in blank, at the principal
office of the Company (or such other place a may be designated by the Company) and shall give written notice to the Company at
said office that the holder elects to convert same, setting forth the name or names (with the address or addresses) in which the
shares of Common Stock are to be issued. Shares of the Preferred Stock shall be deemed to have been converted as of the close of
business on the date the Company shall receive the written notice of conversion, together with the duly executed certificate and
payment in full of transfer tax, if applicable, and the rights of the holders of su.ch Preferred Stock shall cease at such time,
and the person or persons in whose name or names the certificates for such shares are to be issued shall be treated for all purposes
as having become the record holder or holders of such Common Stock at such time; provided, however, that any such surrender on
any date when the stock transfer books of the Company shall be closed shall constitute the person or persons in whose name or names
the certificates for such shares to be issued as the record holder or holders thereof for all purposes at the close of business
on the next succeeding day on which such stock transfer books are open.

 

     

     

    

 

(c) Conversion of the Preferred
Stock shall be subject to the following additional terms and provisions:

 

(i) As promptly as practicable
after the surrender for conversion of any certificate or certifi-cate representing Preferred Stock, the Company shall deliver or
cause to be delivered at the principal office of the Company (or such other place as may be designated by the Company) to or upon
the written order of the holder of such Preferred Stock, certificates representing the shares of Common Stock issuable upon the
conversion, issued in such name or names as such holder may direct.

 

(ii) The Company shall
at the time of such conversion pay to the holder of record of any share or shares of such Preferred Stock any accrued but unpaid
dividends on such Preferred Stock so surrendered for conversion, except that no payment or adjustment shall be made for any accrued
or unpaid dividends for the then current quarterly dividend.

 

(iii) The Company shall
not be required to issue any fractions of shares of Common Stock or script upon the conversion of Preferred Stock. If more than
one share of Preferred Stock shall be surrendered for conversion at any time by the holder, the number of full shares of Common
Stock which shall be is5uable upon conversion of such Preferred Stock shall be computed on the basis of the aggregate number of
shares of Preferred Stock so surrendered. If any interest in a fractional share of Common Stock would otherwise be delivered upon
the conversion of any Preferred Stock, the Company shall make adjustment for such fractional share of interest by payment of an
amount in cash equal to the same fraction of the market value of a full share of Common
Stock of the Company. For such purpose, the market value of a share of Common Stock shall be the prevailing market value of the
Common Stock on any securities exchange or in the open market, as determined by the Company, which determination shall be conclusive.

 

     

     

    

 

(iv) in the event that
the Company shall at any time subdivide or combine in a greater or lesser number of outstanding shares of Common Stock, the number
of shares of Common Stock issuable upon conversion of the Preferred Stock shall be proportionately increased in the case of subdivision
or decreased in the case of combination, effective in either case at the close of business on the date when such subdivision or
combination shall become effective.

 

(v) In the event that the
Company shall be recapitalized, consolidated or merged into any other corporation, or shall sell or convey to any corporation all
or substantially all of its property as an entity, provisions shall be made as part of the terms of such recapitalization, consolidation,
merger, sale or convey-ance so that any holder of Preferred Stock may thereafter receive in lieu of Common Stock otherwise issuable
to him upon his conversion of Preferred Stock, and at the same conversion ratio stated in this Paragraph 2, the same kind and amount
of securities or assets as may be distributable upon such recapitalization, consolidation, merger, sale or conveyance, with respect
to the Common Stock of the Company.

 

(vi) Such adjustments shall
be made success-sively if more than one event listed in subdivision (iv) and (v) of this subparagraph (C) of this Paragraph 2 shall
occur.

 

(vii) No adjustment of
the conversion ratio shall be made by reason of:

 

(A) the payment of any cash
or Common Stock dividend on the Common Stock or any other classes of capital stock of the Company; or

 

(B) the purchase, acquisition,
redemption or retirement by the Company of any shares of Common Stock or any other class of the capital stock of the Company, except
as provided in subdivision (iv) of this subparagraph (c); or

 

     

     

    

 

(C) the issuance other than
as provided in subdivision (iv) and (v) of this subparagraph (c) of any shares of Common Stock of the Company or of any securities
convertible into shares of Common Stock or other securities of the Company, or any rights, warrants or options to subscribe for
or purchase shares of the Common Stock or other securities of the Company, or of any other securities of the Company, provided
that in the event the Company offers any of its securities or any rights, warrants or options to subscribe for or purchase any
of its securities, to holders of itS Common Stock pursuant to any preemptive or preferential rights granted to holders of Common
Stock by the Certificate of Incorporation of the Company, as may be amended, or pursuant to any similar rights that may be granted
to such holders of Common Stock by the Board of Directors of the Company, then the Company shall mail written notice of such offer
to holders of the preferred Stock then of record at least 20 days prior to the record date set for such determination of holders
of the Common Stock entitled to receive any such offer; or

 

(D) Any offer by the Company
to redeem or acquire shares of the Common Stock by paying or exchanging therefore stock of another corporation the carrying out
by the Company of the transactions contemplated by such offer, provided that at leant twenty (20) days prior to the expiration
of any such offer the Company shall mail written notice of such offer to the holders of the Preferred Stock then of record; or

 

(d) The Company shall at
all times reserve and keep available solely for the purpose of issue upon conversion of the Preferred Stock, as herein provided,
such number of shares of Common Stock as shall be issuable upon the conversion of all outstanding Preferred Stock.

 

(e) The issuance of certificate
for shares of Common Stack upon conversion of the Preferred Stock shall be made without charge for any tax in respect to such issuance.
However, if any certificate is to be issued in its name other than that of the holder of record of the Preferred Stock so converted,
the person or persons requesting the issuance thereof shall pay to the Company the amount of tax which may be payable in respect
of any transfer involved in such issuance, or shall establish the satisfaction of the Company that such tax has been paid or is
not due and payable.

 

     

     

    

 

3.              Redemption of Preferred
Stock.

 

(a) The Preferred Stock may
be redeemed at the option of the Company on or after the second anniversary of the Closing Date at $6.25 per share. The Company
may redeem the Preferred Stock at any time prior to the two—year period, if all of the following are true: (i) The Company's
Common Stock trades at or above $2.00 bid for thirty (30) consecutive trading days ending within fifteen (15) days of the date
of the redemption notice, (ii) The Company's Common Stock is listed on NASDAQ and there has been reported volume of at least 100,000
shares per week for the prior four calendar weeks, and (iii) A registration statement is effective with respect to the Common Stock
into which the Preferred Stock is convertible. The applicable redemption price in the first two years is $6.875 (110% of the stated
value of one (1) share of Preferred Stock) plus all dividends accrued and unpaid on such Preferred Stock up to the date fixed for
redemption. In the event that the Company shall call all or part of the Preferred Stock for redemption, the holder of the Preferred
Stock shall have a period of not less than thirty (30) days within which to convert the Preferred Stock to Common Stock before
such redemption shall occur.

 

(b) In the event that
less than the entire amount of Preferred Stock outstanding is redeemed at any one time, the shares to be redeemed shall be
selected by lot in a manner to be determined by the Board of Directors of the Company. Not less than thirty (30) nor more
than sixty (60) days prior to the date fixed for redemption of the Preferred Stock or any part thereof, a notice specifying
the time and place thereof shall be given by mail to the holders of record of the shares of Preferred Stock selected for
redemption at the respective addresses as the same shall appear on the stock records of the Company, but no failure to mail
such notice or any defect therein or in the mailing thereof shall affect the validity of the proceeding for redemption. Any
notice which was mailed in the manner herein provided shall be Conclusively presumed to have been duly given whether or not
the holder receive5 the notice. Upon such redemption date, or such earlier date as the Board of Directors shall designate for
payment of the redemption price (unless the Company shall default on the payment of the redemption price set forth in such
notice). The holders of the shares of Preferred Stock selected for redemption and to vhorn notice has been duly given shall
cease to be stockholders with respect to such shares and shall have no interest in or claim against the Company by virtue
thereof and shall have no rights with respect to such shares except the right to convert such shares within the time
hereinabove set forth and except the right to receive the monies payable upon such redemption from the Company or otherwise,
without interest thereon, upon surrender and endorsement, It required by the Company, of the certificates, and the shares
represented thereby shall no longer be deemed to be Outstanding. Upon redemption or conversion of the Preferred Stock the
manner set Out herein, or upon purchase of Preferred Stock by the Company, the Preferred Stock so acquired by the Company
shall be cancelable and shall not be reissued. After giving any notice of redemption and prior to the close of business on
the date prior to the redemption date. As hereinbefore provided, the holders of the Preferred Stock so called for redemption
may convert such stock into Common Stock of the Company in accordance with the conversion privileges set forth in Paragraph 2
hereof.

 

     

     

    

 

4. Voting Rights. Except
as otherwise required by law, the holders of Preferred Stock shall have no voting rights.

 

5. Priority of Preferred
Stock in the Event of a Dissolution. In the event of any liquidation, dissolution or winding up of the affairs of the Company,
whether voluntary or otherwise, after payment or provi-sion for payment of debts and the liabilities of the Company, the holders
of Preferred Stock shall receive preference on distribution including an amount equal to all dividends accrued and unpaid on each
share up to the date fixed for distribution, before any distribution shall be made to the holder of any c1ass of Common Stock of
the Company.

 

IN WITNESS WHEREOF, the
undersigned have caused its corporate seal to be affixed and this Certificate to be executed by its President and Secretary as
of the 1st day of June, 1993.

 

	Attest:	VERTICAL COMPUTER SYSTEMS
	 	 
	/s/ Brett Howell	By: /s/ Brett Howell
	Title: Secretary	Brett E. Howell, PresidentExhibit 4.3

 

CERTIFICATE
OF DESIGNATION OF

VERTICAL COMPUTER SYSTEMS,
INC.

 

Pursuant to Section 151
of the General Corporation Law of the State of Delaware, the undersigned duly authorized officers of Vertical Computer Systems,
Inc. (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State of Delaware,
DO HEREBY CERTIFY:

 

FIRST: That, pursuant
to authority expressly vested in the Board of Directors of said corporation by the provisions of its Certificate of Incorporation
as amended, said Board of Directors duly adopted the following resolution:

 

RESOLVED: that the
Board of Directors, pursuant to authority expressly vested in it by the provisions of the Certificate of Incorporation of the Corporation,
hereby authorizes the issue from time to time of a series of Preferred Stock of the Corporation and hereby fixes the designation,
preferences and relative, participating, optional or other rights, and the qualifications, limitations or restrictions of the series
thereof, in addition to those set forth in said Certificate of Incorporation, to be in their entirety as follows:

 

SERIES “C” 4% CUMULATIVE
CONVERTIBLE PREFERRED STOCK

 

Section I. Designation
and Number. The series of Preferred Stock shall be designated and known as "Series "C" 4% Cumulative Convertible
Preferred Stock." The number of shares constituting Series “C” 4% Cumulative Convertible Preferred Stock (hereinafter
referred to as the "Series “C” Preferred Stock") shall be Two Hundred Thousand (200,000). For purposes of
this Section, all equity securities of the corporation ranking as to dividends or distributions of assets on liquidation, dissolution
or winding up of the corporation, junior to the Series "C" Preferred Stock, including the Common Stock, are sometimes
hereinafter referred to as "Junior Securities."

 

Section 2. Liquidation
Rights. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the corporation,
the holders of each share of the Series “C” Preferred Stock shall be entitled to receive, prior to and in preference
to any distribution of any of the assets or surplus funds of the corporation to the holders of Junior Securities, by reason of
their ownership thereof, an amount equal to One Hundred Dollars ($100.00) per share (the "Liquidation Value") plus any
accrued but unpaid dividends on the Series "C" Preferred Stock.

 

All of the preferential
amounts to be paid to the holders of the Series “C” Preferred Stock under this Section 2 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, in connection with such liquidation, dissolution or winding up. After the payment or the
setting apart for payment to the holders of the Series “C” Preferred Stock of the preferential amounts so payable to
them, the holders of Junior Securities shall be entitled to receive all remaining assets of the corporation in accordance with
the Certificate of Incorporation of the corporation. If the assets or surplus funds to be distributed to the holders of the Series
"C" Preferred Stock are insufficient to permit the payment to such holders of their full preferential amount, the assets
and surplus funds legally available for distribution shall be distributed ratably among the holders of the Series "C"
Preferred Stock in proportion to the full preferential amount each such holder is otherwise entitled to receive.

 

    	 	1	 

     

    

 

Section 3. Voting Rights.
Except as otherwise provided herein or by law, the holders of Series “C” Preferred Stock shall not be entitled to notice
of any stockholder's meeting and shall not be entitled to vote, together with the holders of all other voting capital stock of
the Company, including the holders of Common Stock, upon any matter submitted to the stockholders for a vote.

 

Section 4. Dividend
Rights. The holders of the Series "C" Preferred Stock shall be entitled to receive, when and as declared by the Board
of Directors out of the funds of the corporation legally available therefore, cumulative cash dividends at the annual rate of four
percent (4%) of the Liquidation Value, payable quarterly on the first day of April, July, October and January in each year beginning
July 1, 2001. The initial dividend paid after the date of original issuance of any shares of the Series "C" Preferred
Stock shall accrue from such date of issuance on a pro rata basis. Dividends payable for any period less than a full quarter shall
be computed on the basis of a 360-day year with 12 equal months of 30 days. Dividends shall be payable to holders of record, as
they appear on the stock books of the Corporation on such record dates as may be declared by the Board of Directors, not more than
sixty (60) days nor less than ten (10) days preceding the payment dates of such dividends. If the dividend on the Series "C"
Preferred Stock is not paid in full, the aggregate deficiency shall be cumulative and shall be fully paid or set apart for payment
before any dividends shall be paid or set apart for, or any other distributions paid, or any payments made on account of the purchase,
redemption or retirement of, Junior Securities other than, in the case of dividends or distributions, dividends or distributions
paid in Junior Securities. No full dividends shall be declared by the Board of Directors or paid or set apart for payment by the
corporation on any Junior Securities for any period unless full cumulative dividends have been or contemporaneously are declared
and paid or declared and a sum set apart sufficient for such payment on the Series "C" Preferred Stock for all dividend
payment periods terminating on or prior to the date of payment of such full dividends on the Series "C" Preferred Stock
shall not bear interest.

 

Notwithstanding, any
dividends payable pursuant to this Section 4 may, at the election of the Board of Directors, be paid, all or in part, in shares
of the Corporation’s Common Stock. Each such share of Common Stock shall be valued at the closing sale price on the record
date of the Corporation’s Common Stock on any exchange or over the counter market on which the Common Stock trades. If the
Common Stock is not listed on any exchange or there is no market for the Common Stock, then the value set by the Board of Directors
shall be determinative.

 

Section 5. Covenants.
So long as fifty percent (50%) of the shares of the Series “C” Preferred Stock authorized hereby shall be outstanding
(as adjusted for all subdivision and combinations, the corporation shall not, without first obtaining the affirmative vote or written
consent of not less than fifty-one percent (51%) of such outstanding shares of the Series "C" Preferred Stock:

 

(a)          amend
or repeal any provision of, or add any provision to, the corporation's Certificate of Incorporation or Bylaws if such action would
alter or change the preferences, rights, privileges or powers of, or the restrictions provided for the benefit of the Series "C"
Preferred Stock; provided that, the authorization of Junior Securities shall not be deemed to alter or change the preferences,
rights, privileges or powers of, or the restriction provided for the benefit of the Series "C" Preferred Stock;

 

    	 	2	 

     

    

 

(b)          reclassify
any Common Stock into shares having any preference or priority of the Series “C" Preferred Stock;

 

(c)          pay
or declare any cash dividend on any Junior Securities or apply any of its assets to the redemption, retirement, purchase or other
acquisition directly or indirectly, through subsidiaries or otherwise, of any Junior Securities or any rights, options, warrants
to purchase, or securities convertible into, Junior Securities except for the acquisition of shares of Common Stock or options
to purchase shares of Common Stock from officers or employees of, or consultants to, the corporation in accordance with any stock
option or other agreement entered into by the corporation;

 

(d)          create
or issue any securities of the corporation which have equity features and which rank senior to the Series "C" Preferred
Stock upon payment of dividends or upon liquidation or other distribution of assets;

 

(e)          increase
the authorized number of shares of the Series “C” Preferred Stock;

 

Section 6. Conversion
into Common Stock. The holder of any shares of Series “C” Preferred Stock shall have conversion rights as follows
(the "Conversion Rights"):

 

(a)          Right
to Convert. Ninety (90) days after issuance, each share of Series "C" Preferred Stock shall be convertible, without
the payment of any additional consideration by the holder thereof and at the option of the holder thereof, into four hundred (400)
fully paid and nonassessable shares of common stock of the Company, subject to adjustment as outlined below.

 

Each share of Series “C”
Preferred Stock is convertible into four hundred (400) shares of the Company's common stock. In the event the Company shall,
at any time prior to the expiration date of this conversion and prior to the exercise thereof: (i) declare or pay to the holders
of the common stock a dividend payable in any kind of shares of stock of the Company; or (ii) change or divide or otherwise reclassify
its common stock into the same or a different number of shares with or without par value, or into shares of any class or classes;
or (iii) consolidate or merge with, or transfer its property as an entirety or substantially as an entirety to, any other corporation;
then, upon subsequent exercise of this conversion, the holder thereof shall receive, in addition to or in substitution for the
shares of common stock to which he would otherwise be entitled upon such exercise, such additional shares of stock of the Company,
or such reclassified shares of stock of the Company, or such shares of the securities or property of the Company resulting from
such consolidation or merger or transfer, which he would have been entitled to receive had he exercised this conversion prior to
the happening of any of the foregoing events.

 

    	 	3	 

     

    

 

(b)          Mechanics
of Conversion. Holders of Series “C” Preferred Stock may exercise their conversion rights at any time ninety (90)
days after issuance. Before any holder of Series “C” Preferred Stock shall be entitled to convert the same into full
shares of common stock, he shall surrender the certificate or certificates therefore, duly endorsed, at the office of the corporation
or of any transfer agent for the Series "C" Preferred Stock, and shall give written notice to the corporation at such
office that he elects to convert the same and shall state therein his name or the name or names of his nominees in which he wishes
the certificate or certificates for shares of common stock to be issued.

 

(c)          The
corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Series "C" Preferred
Stock, or to his nominee or nominees, a certificate or certificates for the number of shares of common stock to which he shall
be entitled as aforesaid, together with cash in payment of any accrued unpaid dividends on the shares of Series "C" Preferred
Stock converted through the date of conversion, and a certificate or certificates for such Series "C" Preferred Stock
as were represented by the certificates surrendered and not converted. Such conversion shall be deemed to have been immediately
prior to the close of business on the date of such surrender of the shares of Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such shares of Common stock on such date.

 

(d)          No
Impairment. The corporation will 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 corporation but will at all times
in good faith assist in the carrying out of all the provisions of this Section 6 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 “C” Preferred Stock
against impairment.

 

(e)          Notices
of Record Date. In the event of any taking by the corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend which is the same
as cash dividends paid in previous quarters) or other distribution, the corporation shall mail to each holder of Series "C"
Preferred Stock at least ten (10) days prior to the date specified herein, a notice specifying the date on which any such record
is to be taken for the purpose of such dividend or distribution.

 

(f)          Common
Stock Reserved. The corporation shall reserve and keep available out of its authorized but unissued Common Stock such number
of shares of Common Stock as shall from time to time be sufficient to effect conversion of the Series "C" Preferred Stock.

 

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IN WITNESS WHEREOF,
the officers named below acting for and on behalf of the corporation, have subscribed their names to this Certificate of Designation
this 13th day of August, 2001.

 

	VERTICAL COMPUTER SYSTEMS, INC.	 
	a Delaware Corporation	 
	 	 	 
	By:	 	 
	 	Richard Wade, President	 
	 	 	 
	By:	 	 
	 	William Mills, Secretary	 

 

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