Document:

exv4w3

 

Exhibit 4.3

CERTIFICATE OF DESIGNATION OF THE RELATIVE RIGHTS AND

PREFERENCES OF THE SERIES F CONVERTIBLE PREFERRED STOCK

OF THE VIALINK COMPANY

     The undersigned, the President of The viaLink Company, 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 F Convertible
Preferred Stock, was duly adopted on May 19, 2004:

     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 F
Convertible Preferred Stock,” consisting of Three Hundred Ninety Five (395) 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 F Convertible Preferred Stock, par value $.001 per share (the “Series F Preferred
Stock”). The maximum number of shares of Series F Preferred Stock shall be Three Hundred Ninety
Five (395) shares. The Series F Preferred Stock shall rank (i) senior to the common stock, par
value $.001 per share (the “Common Stock”), and to all other classes and series of equity
securities of the Company which by its terms does not rank senior to the Series F Preferred Stock
(“Junior Stock”); (ii) senior to shares of the Company’s Series B Convertible Preferred Stock,
Series C Convertible Preferred Stock, Series D Convertible Preferred Stock and Series E Convertible
Preferred Stock, and (iii) junior to any other class or series of equity securities which by its
terms shall rank senior to the Series F Preferred Stock. The Series F Preferred Stock shall be
subordinate to and rank junior to all indebtedness of the Company now or hereafter outstanding.

     2. Dividends. The holders of record of shares of Series F Preferred Stock shall not
be entitled to receive any dividends.

     3. Voting Rights.

     (a) Class Voting Rights. The Series F Preferred Stock shall have the following class
voting rights (in addition to the voting rights set forth in Section 3(b) hereof). So long as any
shares of the Series F Preferred Stock remain outstanding, the Company shall not, without the
affirmative vote or consent of the holders of at least two-thirds (2/3) of the shares of the Series
F 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 F Preferred Stock vote separately as a class: (i)
amend, alter or repeal the provisions of the Series F Preferred Stock, whether by merger,
consolidation or otherwise, so as to adversely affect any right, preference, privilege or voting
power of the Series F Preferred Stock; provided, however, that any creation and
issuance of another series of Junior Stock shall not be deemed to adversely affect such rights,
preferences, privileges or voting powers; (ii) amend the Certificate of Incorporation or By-Laws of
the Company so as to affect materially and adversely any right, preference, privilege or voting
power of the Series F Preferred Stock; provided, however, that any creation and
issuance of another series of Junior Stock shall not be deemed to adversely affect such rights,
preferences, privileges or voting powers; or (iii) effect any distribution with respect to Junior
Stock except for the issuance of shares of Common Stock as payment of dividends on shares of the
Company’s Series E Preferred Stock. Notwithstanding the foregoing to the contrary, so long as any
shares of Series F Preferred Stock are outstanding, the Company shall not authorize, create, issue
or increase the authorized or issued amount of any class or series of stock ranking senior to the
Series F Preferred Stock with respect to the distribution of assets on liquidation, dissolution or
winding up without the affirmative vote or consent of the holders of at least two-thirds (2/3) of
the shares of the Series F Preferred Stock outstanding at the time.

     (b) General Voting Rights. The holder of each share of Series F Preferred Stock shall
be entitled to vote such number of shares of Common Stock into which such share of Series F
Preferred Stock could be converted for purposes of determining the shares of Common Stock entitled
to vote at any regular, annual or special meeting of stockholders of the Company, and shall have
voting rights and powers equal to the voting rights and powers of the Common Stock (except as
otherwise expressly provided herein or as required by law, voting together with the Common Stock as
a single class) and shall be entitled to notice of any stockholders’ meeting in accordance with the
bylaws of the Company. Fractional votes shall not, however, be permitted and any fractional voting
rights resulting from the above formula (after aggregating all shares into which shares of Series F
Preferred Stock held by each holder could be converted) shall be rounded to the nearest whole
number (with one-half being rounded upward).

     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 F 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 F 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 not
sufficient to pay in full the Liquidation Preference Amount payable to the holders of outstanding
shares of the Series F 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 F Preferred Stock, then all of said assets will be distributed among the holders of the
Series F Preferred Stock and the other classes of stock on a parity with the Series F 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 F Preferred Stock shall be equal to a ratably
proportionate amount of the liquidation payment with respect to each outstanding share of Series F
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 the Company’s independent, outside accountant) or
a combination thereof; provided, however, that no cash shall be paid to holders of
Junior Stock unless each holder of the outstanding shares of Series F 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 F 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 F 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 F Preferred Stock at
their respective addresses as the same shall appear on the books of the Company.

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

     (a) Right to Convert. At any time on or after the date of issuance of the Series F
Preferred Stock (the “Issuance Date”), the holder of any such shares of Series F Preferred Stock
may, at such holder’s option, subject to the limitation set forth in Section 7 herein, elect to
convert (a “Conversion”) all or any portion of the shares of Series F 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 F 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.

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

          (i) Holder’s Delivery Requirements. To convert Series F Preferred Stock into full
shares of Common Stock on any date (the “Conversion Date”), the holder thereof shall (A) transmit
by facsimile (or otherwise deliver), for receipt on or prior to 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) surrender to a common carrier for delivery
to the Company as soon as practicable following such Conversion Date but in no event later than
three (3) business days after such date the original certificates representing the shares of Series
F 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”) and the
originally executed Conversion Notice. In the event that the holder elects to convert shares of
Series F Preferred Stock prior to the date of the closing of the Proposed Equity Financing (as
defined in Section 5(c) hereof), the right of such holder to convert shall be conditioned upon such
holder’s agreement not to sell, hypothecate or otherwise transfer any shares of Common Stock for a
period of eight (8) months following the closing of the merger between the Company and Prescient
Systems, Inc.

          (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. Upon receipt by the Company of a copy of the fully executed
Conversion Notice, 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 fully executed Conversion Notice (so long as the applicable Preferred Stock Certificates and
original Conversion Notice are received by the Company on or before such third business day), 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. If the number of shares of Preferred Stock represented by the Preferred
Stock Certificate(s) submitted for conversion is greater than the number of shares of Series F
Preferred Stock being converted, then the Company shall, as soon as practicable and in no event
later than three (3) business days after receipt of the Preferred Stock Certificate(s) and at the
Company’s expense, issue and deliver to the holder a new Preferred Stock Certificate representing
the number of shares of Series F Preferred Stock 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 under this
Certificate of Designation shall be tolled with respect to the subject conversion pending
resolution of any dispute by the Company made in good faith and in accordance with this Section
5(b)(iii).

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

          (v) Company’s Failure to Timely Convert. If within three (3) business days of the
Company’s receipt of the Conversion Notice and the Preferred Stock Certificates to be converted
(the “Share Delivery Period”) the Company shall fail to issue and deliver to a holder the number of
shares of Common Stock to which such holder is entitled upon such holder’s conversion of the Series
F Preferred Stock or to issue a new Preferred Stock Certificate representing the number of shares
of Series F Preferred Stock to which such holder is entitled pursuant to Section 5(b)(ii) (a
“Conversion Failure”), in addition to all other available remedies which such holder may pursue
hereunder and under the Series F Convertible Preferred Stock Purchase Agreement among the Company
and the purchasers listed therein (the “Purchase Agreement”) (including indemnification pursuant to
Article VI thereof), the Company shall pay additional damages to such holder on each business day
after such third (3rd) business day that such conversion is not timely effected in an
amount equal 0.5% of the product of (A) the sum of the number of shares of Common Stock not issued
to the holder on a timely basis pursuant to Section 5(b)(ii) and to which such holder is entitled
and, in the event the Company has failed to deliver a Preferred Stock Certificate to the holder on
a timely basis pursuant to Section 5(b)(ii), the number of shares of Common Stock issuable upon
conversion of the shares of Series F Preferred Stock represented by such Preferred Stock
Certificate, as of the last possible date which the Company could have issued such Preferred Stock
Certificate to such holder without violating Section 5(b)(ii) and (B) the Closing Bid Price (as
defined in Section 5(d) below) of the Common Stock on the last possible date which the Company
could have issued such Common Stock and such Preferred Stock Certificate, as the case may be, to
such holder without violating Section 5(b)(ii). If the Company fails to pay the additional damages
set forth in this Section 5(b)(v) within five (5) business days of the date incurred, then such
payment shall bear interest at the rate of 2% per month (pro rated for partial months) until such
payments are made.

     (c) Mandatory Exchange of Series F Preferred Stock. If the Company consummates a
private placement of at least $3,000,000 of shares of the Company’s equity securities (or such
lesser amount as may be agreed upon by the Company and the holders of at least two-thirds (2/3) of
the shares of Series F Preferred Stock outstanding at such time) after the Company has consummated
a merger (the “Merger”) with Prescient Systems, Inc. in which the Company is the surviving entity
(the “Proposed Equity Financing”), the outstanding shares of Series F Preferred Stock shall be
automatically exchanged into such number of equity securities of the Company

 

 

issued pursuant to the
Proposed Equity Financing equal to one hundred ten percent (110%) of the Liquidation Preference
Amount of the shares of Series F Preferred Stock being converted divided by the price per share of
the equity securities of the Company being issued pursuant to the Proposed Equity Financing. Upon
the exchange of the shares of Series F Preferred Stock, the shares of Series F Preferred Stock
shall be deemed to be the consideration for the holder’s interest in the equity securities of the
Company upon consummation of the Proposed Equity Financing.

     (d) Conversion Price.

          (i) The term “Conversion Price” shall mean $2.00 per share, subject to adjustment under
Section 5(e) hereof. The parties acknowledge that the initial Conversion Price
of $2.00 is intended to give effect to the 1-for-20 reverse stock split to be effected following
the Merger with a record date on or about January 10, 2005 (the “Stock Split”).

          (ii) The term “Closing Bid Price” shall mean, for any security as of any date, the last
closing bid price of such security on any stock exchange or market on which the security is then
listed or admitted for trading or quotation, as applicable, the OTC Bulletin Board for such
security as reported by Bloomberg, or, if no closing bid price is reported for such security by
Bloomberg, the last closing trade price of such security as reported by Bloomberg, or, if no last
closing trade price is reported for such security by Bloomberg, the average of the bid prices of
any market makers for such security as reported in the “pink sheets” by the National Quotation
Bureau, Inc. If the Closing Bid Price cannot be calculated for such security on such date on any
of the foregoing bases, the Closing Bid Price of such security on such date shall be the fair
market value as mutually determined by the Company and the holders of a majority of the outstanding
shares of Series F Preferred Stock.

     (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. Notwithstanding the foregoing, there shall be
no adjustment made to the Conversion Price under this Section 5(e)(i) as a result of the Stock
Split. 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 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 F 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 F 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 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 F Preferred Stock.

 

 

          (iv) Adjustments for Reclassification, Exchange or Substitution. If the Common Stock
issuable upon conversion of the Series F 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 (by adjustments of the Conversion Price or otherwise) so that the
holder of each share of Series F Preferred Stock shall have the right thereafter to convert such
share of Series F 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 F 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
(by adjustments of the Conversion Price or otherwise) so that the holder of each share of Series F
Preferred Stock shall have the right thereafter to convert such share of Series F 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 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 F 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 F Preferred Stock) shall be applied after that event in as nearly an
equivalent manner as may be practicable.

     (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 F Preferred Stock against impairment.
In the event a holder shall elect to convert any shares of Series F 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 F Preferred Stock shall have been issued and the Company posts a surety bond for
the benefit of such holder in the amount of the difference between the Conversion Price and the
Closing Bid Price on the trading day preceding the date of the attempted conversion multiplied by
the number of shares of Series F Preferred Stock sought to be converted, 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 F 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 F 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 F 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 F 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 F 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
being mailed by certified or registered mail, postage prepaid, return-receipt requested, addressed
to the holder of record at its address appearing on the books of the Company. The Company will
give written notice to each holder of Series F 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 F 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 F 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 days immediately preceding the Conversion Date.

     (k) Reservation of Common Stock. The Company shall, so long as any shares of Series F
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 F 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 F Preferred Stock then outstanding; provided that the
number of shares of Common Stock so reserved shall at no time be less than 100% of the number of
shares of Common Stock for which the shares of Series F Preferred Stock are at any time
convertible. The initial number of shares of Common Stock reserved for conversions of the Series F
Preferred Stock and each increase in the number of shares so reserved shall be allocated pro rata
among the holders of the Series F Preferred Stock based on the number of shares of Series F
Preferred Stock held by each holder at the time of issuance of the Series F Preferred Stock or
increase in the number of reserved shares, as the case may be. In the event a holder shall sell or
otherwise transfer any of such holder’s shares of Series F Preferred Stock, each transferee shall
be allocated a pro rata portion of the number of reserved shares of Common Stock reserved for such
transferor. Any shares of Common Stock reserved and which remain allocated to any person or entity
which does not hold any shares of Series F Preferred Stock shall be allocated to the remaining
holders of Series F Preferred Stock, pro rata based on
the number of shares of Series F Preferred Stock then held by such holder. The Company shall, from
time to time in accordance with the Delaware General Corporation Law, as amended, increase the
authorized number of shares of Common Stock if at any time the unissued number of authorized shares
shall not be sufficient to satisfy the Company’s obligations under this Section 5(k).

     (l) Regulatory Compliance. If any shares of Common Stock to be reserved for the
purpose of conversion of Series F 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 Rights. Except as provided in Section 5 hereof and in the Purchase
Agreement, no holder of the Series F 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 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.

     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 F
Preferred Stock convert shares of the Series F 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, would result in such holder beneficially owning
(as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended,
and the rules thereunder) in excess of 9.9% of the then issued and outstanding shares of Common
Stock outstanding at such time; provided, however, that upon a holder of Series F
Preferred Stock providing the Company with sixty-one (61) days written notice (pursuant to Section
4(i) hereof) (the “Waiver Notice”) that such holder would like to waive Section 7 of this
Certificate of Designation with regard to any or all shares of Common Stock issuable upon
conversion of Series F Preferred Stock, this Section 7 shall be of no force or effect with regard
to those shares of Series F 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, the Company cannot issue shares of Common Stock registered for resale under
the registration statement for any reason, including, without limitation, because the Company (x)
does not have a sufficient number of shares of Common Stock authorized and available, (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 F Preferred Stock pursuant to a Conversion Notice or (z) fails to have a
sufficient number of shares of Common Stock registered for resale under the registration statement,
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 and pursuant to Section 5(b)(ii) above and, with respect to
the unconverted Series F Preferred Stock, the holder, solely at such holder’s option, can elect,
within five (5) business days after receipt of notice from the Company thereof to:

 

 

          (i) if the Company’s inability to fully convert Series F Preferred Stock is pursuant to
Section 8(a)(z) above, require the Company to issue restricted shares of Common Stock in accordance
with such holder’s Conversion Notice and pursuant to Section 5(b)(ii) above; or

          (ii) void its Conversion Notice and retain or have returned, as the case may be, the shares of
Series F Preferred Stock that were to be converted pursuant to such holder’s Conversion Notice
(provided that a holder’s voiding its Conversion Notice shall not affect the Company’s obligations
to make any payments which have accrued prior to the date of such notice).

     (b) Mechanics of Fulfilling Holder’s Election. The Company shall immediately send via
facsimile to a holder of Series F 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
Series F Preferred Stock which cannot be converted. Such holder shall notify the Company of its
election pursuant to Section 8(a) above by delivering written notice via facsimile to the Company
(“Notice in Response to Inability to Convert”).

     (c) Pro-rata Conversion. In the event the Company receives a Conversion Notice from
more than one holder of Series F Preferred Stock on the same day and the Company can convert some,
but not all, of the Series F Preferred Stock pursuant to this Section 8, the Company shall convert
from each holder of Series F Preferred Stock electing to have Series F Preferred Stock converted at
such time an amount equal to such holder’s pro-rata amount (based on the number shares of Series F
Preferred Stock held by such holder relative to the number shares of Series F Preferred Stock
outstanding) of all shares of Series F Preferred Stock being converted at such time.

     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 two-thirds (2/3) of the then outstanding shares of Series F Preferred Stock, shall be
required (a) 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 F Preferred Stock or (b) for the issuance of shares of Series
F Preferred Stock other than pursuant to the Purchase Agreement.

     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 F 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;
provided, however, the Company shall not be obligated to re-issue Preferred Stock
Certificates if the

 

 

holder contemporaneously requests the Company to convert such shares of Series
F Preferred Stock into Common Stock.

     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 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 payments, 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 F 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 F 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 F 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 F 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 Certificate and does
affirm the foregoing as true this ___day of ___, 2004.

	 	 	 	 	 
	 	THE VIALINK COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

EXHIBIT I

THE VIALINK COMPANY

CONVERSION NOTICE

Reference is made to the Certificate of Designation of the Relative Rights and Preferences of the
Series F Preferred Stock of The viaLink Company (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 F Preferred Stock, par value $.001 per share (the “Preferred Shares”),
of The viaLink Company, 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 pursuant to the registration statement: YES        NO      

Please confirm the following information:

	 	 	 	 	 
	Conversion Price:
	 	 	 	 
	 
	 	 
	 
	 	 	 	 
	Number of shares of Common Stock
	 	 	 	 
	to be issued:
	 	 	 	 
	 
	 	 

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:<PAGE>
                                                                   EXHIBIT 10.28

STATE OF NORTH CAROLINA

COUNTY OF DURHAM                                           FIRST LEASE AMENDMENT

      THIS FIRST LEASE AMENDMENT (the "Amendment") is entered into and effective
this 11 day of December, 2002, by and between PROPERTY RESERVE, INC, a Utah
corporation (hereinafter "Landlord"), and DIGITAL RECORDERS, INC., a North
Carolina corporation (hereinafter, "Tenant").

                                    RECITALS:

      A. The Prudential Savings Bank, F.S.B., as Trustee ("Prudential") and
Tenant entered into a Lease Agreement dated December 18, 1998 (the "Lease") for
approximately eighteen thousand four hundred eighty-four (18,484) rentable
square feet of space (the "Existing Premises") located in Suite 100 at that
certain building known as 4018 Patriot Drive, Durham, Durham County North
Carolina 27709, being part of that development known as One Park Center.

      B. Landlord succeeded to Prudential's interest as Landlord under the
Lease.

      C. Landlord and Tenant now desire to modify and amend the Lease pursuant
to the terms and conditions contained herein.

                                   AGREEMENT:

      NOW, THEREFORE, for valuable consideration and ONE AND NO/100 DOLLARS
($1.00) paid by Tenant to Landlord, Landlord and Tenant agree that the Lease is
modified and amended as follows:

      1.    Commencing on the Additional Space Commencement Date, as defined
            herein, the Premises shall be expanded to include approximately four
            thousand rentable square feet (4,000 r.s.f.), more or less, (the
            "Additional Space") contiguous to the Existing Premises, as shown
            on Exhibit A, attached hereto and incorporated herein by reference.
            As of the Additional Space Commencement Date, the Premises shall
            contain a total of twenty-two thousand four hundred eighty-four
            rentable square feet (22,484 r.s.f.).

      2.    As of January 1, 2003:

            a.    Tenant's Pro Rata Share for operating expense pass throughs
                  and other purposes shall be recalculated based on the revised
                  square footage of the Premises; and

            b.    The Base Year Amount for determining operating expense pass
                  throughs attributable for the Additional Space incurred after
                  the Additional Space

<PAGE>

                  Commencement Date shall be the operating expenses paid or
                  incurred by Landlord for calendar year 2003. The Base Year for
                  the Existing Space shall remain unchanged; and

            c.    In addition to the Base Rent on the Existing Premises, Tenant
                  shall pay Base Rent on the Additional Space as follows:

<TABLE>
<CAPTION>
                                                               Installment of Monthly Base
                                                               ---------------------------
                              Month                                     Rent
                              -----                                     ----
                  <S>                                          <C>
                  January 1, 2003 - April 30, 2004                    $1,983.33
                  May 1, 2004 - April 30, 2005                        $2,042.83
                  May 1, 2005 - April 30, 2006                        $2,104.12
                  May 1, 2006 - April 30, 2007                        $2,167.24
                  May 1, 2007 - April 30, 2008                        $2,232.26
                  May 1, 2008 - April 30, 2009                        $2,299.23
</TABLE>

            d.    Any other sums calculated based on rentable square footage of
                  the Premises shall be recalculated based on 22,484 rentable
                  square feet. The provisions of Paragraph 3(h) of the Lease
                  limiting annual increases in Controllable Expenses shall not
                  limit increases arising from the increase in the rentable
                  square footage of the Premises.

            e.    Except as specifically modified hereby, all references to
                  "rent," "Base Rent," "operating expenses," and "additional
                  rent" shall be interpreted to apply as and to reflect the
                  revised square footage of the Premises.

      3.    The term of the Lease shall not be affected by this First Amendment;
            the Lease shall expire as of April 30, 2009, unless earlier
            terminated as set forth in the Lease.

      4.    The "Additional Space Commencement Date" shall mean the date
            Landlord and Tenant execute this Lease. It is understood that Tenant
            may use the Additional Space once the Lease is fully executed and
            pay no rent until January 1, 2003. Tenant agrees to execute a
            document setting out the actual Additional Space Commencement Date
            upon Landlord's request.

      5.    Tenant has examined and inspected the Additional Space and accepts
            the Additional Space in all respects "AS IS" and "WHERE IS."

      6.    Landlord acknowledges that it currently holds $12,707.25 as a
            Security Deposit pursuant to Paragraph 3(b) of the Lease. As of the
            Additional Space Commencement Date, Tenant shall deposit an
            additional $ -0- with Landlord to

                                       2
<PAGE>

            be added to the Security Deposit, bringing the total Security
            Deposit being held by Landlord in connection with the Lease to
            $12,707.25.

      7.    Tenant acknowledges that it has accepted possession of the Existing
            Premises and that Landlord has completed any required Tenant
            Improvements of the Existing Premises, and Tenant has received all
            the Tenant Improvement Allowance.

      8.    The permitted usage under Paragraph 5(a) of the Lease is revised to
            include storage, subject to the prohibitions set forth in the Lease
            such as the prohibition on storage of explosive or highly flammable,
            toxic or hazardous substances.

      9.    Tenant is currently in the process of negotiating adding an
            additional 8,000 approximate rentable square feet to the Premises.
            It is understood and agreed that so long as allowed by applicable
            law, Landlord initially will simply mark the boundaries of the
            Additional Space on the floor of the warehouse space and will not
            build a wall separating the Additional Space. Tenant will respect
            such marked lines as the boundary of its Additional Space. If
            Landlord and Tenant have not negotiated a lease or lease amendment
            for the contemplated 8,000 additional rental square feet within
            sixty (60) days from the date hereof, then Landlord may build a wall
            setting off the Additional Space.

      10.   Tenant acknowledges that any guaranty, letter of credit, or other
            form of security which was intended to be applicable to the Existing
            Premises or Lease pursuant to Paragraph 3 of Exhibit D to the Lease
            shall also be applicable to the Additional Space and the Lease as
            amended by this First Lease Amendment. Tenant agrees to deliver such
            documents or other items, signed by all appropriate parties as may
            be requested by Landlord to evidence this agreement.

      11.   Tenant represents and warrants to Landlord that Tenant has not
            entered into any agreements, nor will Tenant enter into any
            agreement in the future whereby Landlord would be obligated to pay
            any broker's commission or finder's fee in connection with Tenant's
            execution of this First Lease Amendment. Tenant agrees to indemnify
            Landlord against, and to hold Landlord harmless from, all
            liabilities arising from any such claim.

      12.   The Termination Option set out in Paragraph 1 of Exhibit D to the
            Lease has not been exercised and is hereby deleted, null and void
            and of no further force or effect.

      13.   Capitalized terms not defined herein shall have the same meaning as
            set forth in the Lease.

      14.   Except as specifically modified hereby, all the terms and provisions
            of the Lease shall remain in full force and effect and are hereby
            affirmed and ratified.

                                       3
<PAGE>

      IN WITNESS WHEREOF, Landlord and Tenant have executed this First Amendment
to Lease in triplicate originals, all as of the day and year first above
written.

                                          LANDLORD:

                                          PROPERTY RESERVE, INC.,
                                          a Utah corporation

                                          By: /s/ Mark B. Gibbons
                                              ------------------------
                                          Name:
                                          Title:
                                              -----------------------

                                          Date: 12/12/02

                                          TENANT:

                                          DIGITAL RECORDERS, INC.,
                                          a North Carolina corporation

                                          By: /s/ Lawrence A. Hagemann
                                              ------------------------
                                          Name: LAWRENCE A. HAGEMANN
                                          Title: EVP DRI

                                          Date: Dec. 11, 2002

                                       4
<PAGE>

                              SCHEDULE OF EXHIBITS

Exhibit A   Diagram showing Additional Space in relation to its location in the
            Building. Preferable to cross hatch Additional Space.

<PAGE>

                                   EXHIBIT "A"
                                    PREMISES

                             [ONE PARK CENTER MAP]

                          ADDITIONAL DRI SPACE AS PART
                         OF SUITE 100 PER FIRST LEASE
                            AMENDMENT DECEMBER 2002

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00076-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00076-of-00352.parquet"}]]