DELAWARE
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The First State
I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE,
DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "TRIBEWORKS, INC.", FILED IN THIS OFFICE ON THE THIRTY-FIRST DAY
OF MAY, A.D. 2005, AT 1:52 O'CLOCK P.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
(SEAL)
/s/ Harriet Smith Windsor
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Harriet Smith Windsor,
Secretary of State
3143589 8100 AUTHENTICATION: 3916452
050450481 DATE: 06-01-05
CERTIFICATE OF DESIGNATION, PREFERENCES,
RIGHTS AND LIMITATIONS OF
SERIES A CONVERTIBLE REDEEMABLE PREFERRED STOCK
OF
TRIBEWORKS, INC.
Tribeworks, 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 of
the Company (the "Board") by the Certificate of Incorporation of the Company,
and pursuant to the provisions of Section 151 of the Delaware General
Corporation Law, as amended (the "DGCL"), such Board, by unanimous written
consent of its members dated effective May 24, 2005, filed with the minutes of
the Board, adopted a resolution providing for the issuance of a series of One
Million (1,000,000) shares of Series A Convertible Redeemable Preferred Stock,
which resolution is as follows:
RESOLVED, that pursuant to the authority vested in the Board in
accordance with the provisions of the Company's Certificate of Incorporation, a
series of Preferred Stock of the Company be and hereby is created, such series
of Preferred Stock to be designated Series A Convertible Redeemable Preferred
Stock, to consist of One Million (1,000,000) shares, to be issued at a price of
$0.50 per share (the "Stated Value"), with the voting powers, preferences and
relative, participating, optional and other special rights, and the
qualifications, limitations or restrictions of such series to be as set forth in
the Certificate of Designation.
The voting powers, preferences and relative, participating, optional
and other special rights, and the qualifications, limitations or restrictions
thereof shall be as follows:
1. DESIGNATION AND AMOUNT. The shares of such series shall have a Stated Value
of $0.50 per share and shall be designated as Series A Convertible Redeemable
Preferred Stock (the "Series A Preferred Stock") and the number of shares
constituting the Series A Preferred Stock shall be One Million (1,000,000).
2. RANK. The Series A Preferred Stock shall rank prior to all of the Company's
common stock, par value $0.0004 per share ("Common Stock"),with respect to
dividends and distributions of assets upon liquidation, dissolution or winding
up of the Company, whether voluntary or involuntary.
3. DIVIDENDS.
(a) Dividends on Series A Preferred Stock. Beginning on the date
of issuance, holders of shares of Series A Preferred Stock
shall be entitled to receive annual
cumulative dividends equal to ten percent (10%) of the
aggregate Liquidation Preference (which shall be the Stated
Value of the Series A Preferred Stock, plus accrued but unpaid
dividends, if any) per share of Series A Preferred Stock.
Accrued dividends with respect to each share of Series A
Preferred Stock shall be paid in cash or in shares of the
Company's common stock, par value $0.0004 per share ("Common
Stock"), at the Company's sole option.
(b) Restrictions on Dividends on Common Stock. During such time as
any Series A Preferred Stock is outstanding, the Company shall
not declare or pay any dividend on shares of Common Stock
unless the holders of the then outstanding shares of Series A
Preferred Stock shall have received all accrued dividends as
described in Section 3(a) above prior to the declaration and
payment of a dividend on the Common Stock.
(c) Payments to Holders of Series A Preferred Stock. Each such
dividend shall be payable to the holders of the Series A
Preferred Stock of record as they appear on the stock ledger
of the Company on the record date of such dividend. No
dividend shall be declared or paid if such declaration or
payment would cause the Company to violate any provision of
the DGCL.
4. LIQUIDATION PREFERENCE.
(a) Preferential Distributions. The initial liquidation preference
(the "Liquidation Preference") of the Series A Preferred Stock
shall be an amount equal to $0.50 per share (subject to
adjustment upward to the extent required to satisfy the
dividend preference requirements of Section 3). In the event
of any voluntary or involuntary liquidation (including a
partial liquidation, dissolution or winding up of the affairs
of the Company), the holders of shares of Series A Preferred
Stock then outstanding shall be entitled to be paid out of the
Company's funds legally available for distribution to its
stockholders an amount in cash equal to the Liquidation
Preference for each share outstanding before any payment shall
be made or any assets distributed to the holders of any Common
Stock. If the assets of the Company are insufficient to pay in
full the liquidation payments payable to the holders of
outstanding shares of the Series A Preferred Stock, then the
entire assets of the Company legally available for
distribution shall be distributed ratably among the holders of
the Series A Preferred Stock in proportion to the preferential
amount each such holder is otherwise entitled to receive.
(b) Certain Transactions. For purposes of this Section 4, the
sale, conveyance, exchange or transfer (for cash, shares of
stock, securities, or other consideration) of all or
substantially all of the assets or property of the Company or
the statutory exchange or consolidation or merger of the
Company with or into one or more entities, shall be deemed to
be a liquidation, dissolution, or winding up of the Company
(collectively, a "Liquidity Event"), unless the holders of all
of the then outstanding shares of Series A Preferred Stock
shall elect not to treat any such
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transaction as a liquidation, dissolution or winding up of the
Company, in which case Section 6(c) shall apply.
(c) Actions upon Merger, Consolidation, Etc. Prior to the closing
of a transaction described in Section 4(b) which would
constitute a Liquidity Event, the Company shall either (i)
make all distributions it is required to make to the holders
of Series A Preferred Stock pursuant to the first sentence of
Section 4(a), or (ii) set aside sufficient funds from which
all such cash distributions required to be made to the holders
of Series A Preferred Stock can be made, or (iii) establish an
escrow or other similar arrangement with a third party
pursuant to which the proceeds payable to the Company from a
sale of all or substantially all the assets of the Company
will be used to make the liquidating payments to the holders
of Series A Preferred Stock immediately after the consummation
of such sale. In the event that the Company has not fully
complied with any of the foregoing alternatives, the Company
shall either: (i) cause such closing to be postponed until
such distributions have been made, or (ii) cancel such
transaction, in which event the rights of the holders of
shares of Series A Preferred Stock shall be the same as
existing immediately prior to such proposed transaction.
5. REDEMPTION.
(a) Redemption at the Company's Option. At any time on or after
the date of issuance (an "Optional Redemption Date"), the
Company may, at its election, redeem all, but not less than
all, of the shares of Series A Preferred Stock then
outstanding on such Optional Redemption Date.
(b) Redemption Payment. The aggregate Redemption Price (as defined
in Section 5(c) below) payable to each holder of shares of
Series A Preferred Stock pursuant to this Section 5 shall be
paid to such holder in a single lump-sum payment.
(c) Redemption Price. The redemption price (the "Redemption
Price") for each share of Series A Preferred Stock redeemed
pursuant to this Section 5 shall be the greater of (a) $0.50
per share of Series A Preferred Stock plus any accrued but
unpaid dividends thereon. If on or before the Optional
Redemption Date all funds necessary for such redemption shall
have been set aside by the Company, separate and apart from
its other funds in trust for the prorata benefit of the
holders of the Series A Preferred Stock, so as to be and
continue to be available therefor, then from and after the
Optional Redemption date, notwithstanding that any certificate
for shares of the Series A Preferred Stock shall not have been
surrendered for cancellation, the shares represented thereby
shall no longer be deemed outstanding, and all rights with
respect to shares of the Series A Preferred Stock shall
forthwith on the Optional Redemption Date cease and terminate
except only as to the right of the holders thereof to receive
the Redemption Price of such Shares so to be redeemed. Any
monies set aside by the Company and unclaimed at the end of
five (5) years from the Optional Redemption Date shall revert
to the general funds of the Company (provided that the holders
of the Series A Preferred
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Stock have received notice of the redemption within thirty
(30) days after the Optional Redemption Date.
(d) Equitable Adjustment. The Redemption Price set forth in this
Section 5 shall be subject to equitable adjustment whenever
there shall occur a stock split, stock dividend, combination,
reorganization, recapitalization, reclassification or other
similar event involving a change in the Series A Preferred
Stock.
(e) Redemption Notice. At least thirty (30) days prior to the
Optional Redemption Date described specified in Section 5(a)
above, written notice (hereinafter referred to as the
"Redemption Notice") shall be delivered by the Company to each
holder of record of Series A Preferred Stock, at such holder's
address as shown on the stock ledger of the Company or its
transfer agent, if applicable. The Redemption Notice shall
contain the following information:
(i) a statement that the Company intends to redeem all
the shares of Series A Preferred Stock held by the
holder and subject to redemption on such date, and
the total number of shares of Series A Preferred
Stock held by all holders which the Company has
determined will be redeemed on such date;
(ii) the Redemption Date and the applicable Redemption
Price (subject to the provisions of Section 5(c)
above); and
(iii) a statement that the holder is to surrender to the
Company, at the place designated in the Redemption
Notice or to the Company's designated transfer agent
(the "Transfer Agent"), its certificate or
certificates representing all of the shares of Series
A Preferred Stock so to be redeemed.
(f) Notice of Acknowledgement. Within thirty (30) days after
receipt of a Redemption Notice, any holder of Series A
Preferred Stock shall provide the Company with written notice
of such holder's acknowledgement of the Company's intention to
redeem his shares, which notice shall specify the number of
shares to be redeemed. All notices hereunder shall be deemed
to have been given if personally delivered, sent by facsimile
transmission, prepaid overnight courier, or certified or
registered mail.
(g) Surrender of Certificates. Each holder of shares of Series A
Preferred Stock shall surrender the certificate(s)
representing such shares to be redeemed to the Company at the
address specified in the Redemption Notice or to the Transfer
Agent, and thereupon the Redemption Price for such shares as
set forth in this Section 5 shall be paid to the order of the
person whose name appears on such certificate(s) and each
surrendered certificate shall be cancelled and retired.
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(h) Option to Convert. After receipt of the Redemption Notice and
prior to the close of business on the business day prior to
the Redemption Date, the holders of the Series A Preferred
Stock so called for redemption may convert such stock, or any
number of shares thereof, into Common Stock in accordance with
the conversion privileges set forth in Section 6 hereof.
Unless: (i) the holder of shares of Series A Preferred Stock
to whom such Redemption Notice has been duly given shall have
exercised its rights to convert in accordance with Section 6
hereof; or (ii) the Company shall default in the payment of
the Redemption Price as set forth in the Redemption Notice (or
as determined in accordance with the provisions Section 5(c)),
upon such Redemption Date such holder shall no longer have any
voting or other rights with respect to such shares, except the
right to receive the monies payable upon such redemption from
the Company, without interest thereon, upon surrender (and
endorsement, if required by the Company or the Transfer Agent)
of the certificate(s), and the shares represented thereby
shall no longer be deemed to be outstanding as of the
Redemption Date. In the event a holder of Series A Preferred
Stock provides the Company with notice of conversion of all or
a portion of such Series A Preferred Stock into shares of
Common Stock on or after any Redemption Notice is provided,
the holder shall have be deemed to have converted such shares
as of the Redemption Date; provided, however, that in the
event the Company shall default in the payment of the
Redemption Price as set forth in such Redemption Notice (or as
determined in accordance with the provisions Section 5(c)),
the conversion shall not be effective unless the holder of the
Series A Preferred Stock electing to convert provides written
notice to the Company within twenty (20) days of the purported
Redemption Date of his desire to effect such conversion.
(i) Status. All shares of Series A Preferred Stock so redeemed
shall have the status of authorized but unissued preferred
stock, but such shares so redeemed shall not be reissued as
shares of Series A Preferred Stock created hereby.
(j) Common Stock Reservation. If the Company calls for redemption
of the Series A Preferred Stock, it shall reserve sufficient
shares of Common Stock for the purpose of issuing such shares
of Common Stock to holders of Series A Preferred Stock that
determine to convert such shares of Series A Preferred Stock
into Common Stock pursuant to the provisions of this Section
5.
6. CONVERSION. The Series A Preferred Stock shall be convertible as follows (the
"Conversion Rights"):
(a) Each share of Series A Preferred Stock shall be convertible,
at the sole option of the Company, at any time after the date
of issuance of such share, at the office of the Company or any
transfer agent for the Series A Preferred Stock, into such
number of fully paid and nonassessable shares of Common Stock
(the "Conversion Rate") as is determined by dividing $0.50 per
share by the Conversion Price for the Series A Preferred Stock
in effect on the date of such
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conversion. The conversion price shall be $0.50 (such price
being referred to as the "Conversion Price").
(b) Mechanics of Conversion. Before any holder of Series A
Preferred Stock shall be entitled to convert any of such
shares into shares of Common Stock, such holder shall
surrender the certificate or certificates therefor, duly
endorsed, at the office of the Company or of any transfer
agent for the Series A Preferred Stock, and shall give written
notice by mail, postage prepaid, to the Company at its
principal corporate offices, of the election to convert the
same and shall state therein the name or names in which the
certificate or certificates for shares of Common Stock are to
be issued. The Company shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of
Series A Preferred Stock, or to the nominee or nominees of
such holder, a certificate or certificates representing the
number of shares of Common Stock to which such holder shall be
entitled as aforesaid. Such conversion shall be deemed to have
been made immediately prior to the close of business on the
date of such surrender of the shares of Series A Preferred
Stock to be converted (the "Conversion Date"), and the person
or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of
Common Stock as of the Conversion Date.
(c) Reorganizations and Recapitalizations. If at any time or from
time to time there shall be a reorganization or
recapitalization of the Common Stock (other than a
subdivision, combination or merger or sale of assets
transaction provided for in Section 4 hereof), then, as a
condition of such reorganization or recapitalization,
provision shall be made so that the holders of the Series A
Preferred Stock shall thereafter be entitled to receive upon
conversion of the Series A Preferred Stock the number of
shares of stock or other securities or property of the Company
or otherwise, to which a holder of Common Stock deliverable
upon conversion would have been entitled on such
reorganization or recapitalization. In any such case,
appropriate adjustment shall be made, in the good faith
determination of the Board of Directors of the Company, in the
application of the provisions of this Section 6 with respect
to the rights of the holders of the Series A Preferred Stock
after the recapitalization to the end that the provisions of
this Section 6 (including adjustment of the Conversion Price
then in effect and the number of shares receivable upon
conversion of the Series A Preferred Stock) shall be
applicable after that event in as nearly an equivalent manner
as may be practicable.
(d) No Impairment. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization,
recapitalization, 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 6 and in the taking of all such action (including the
reduction of par value of the Common Stock or the Series A
Preferred Stock) as may be necessary or
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appropriate in order to protect the conversion rights of the
holders of the Series A Preferred Stock.
(e) No Fractional Shares. No fractional shares shall be issued
upon conversion of the Series A Preferred Stock and the number
of shares of Common Stock to be issued shall be rounded down
to the nearest whole share, and there shall be no payment to a
holder of Series A Preferred Stock for any such rounded
fractional shares. Whether or not fractional shares result
from such conversions shall be determined on the basis of the
total number of shares of Series A Preferred Stock the holder
is at the time converting into Common Stock and the number of
shares of Common Stock issuable upon such aggregate
conversion.
(f) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price of Series A
Preferred Stock pursuant to this Section 6, the Company, at
its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare
and furnish to each holder of Series A Preferred Stock a
certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon the written
request at any time of any holder of Series A Preferred Stock,
furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustment and
readjustment, (ii) the Conversion Price at the time in effect,
and (iii) the number of shares of Common Stock and the amount,
if any, of other property which at the time would be received
upon the conversion of a share of Series A Preferred Stock.
(g) Reservation of Stock Issuable Upon Conversion. The Company
shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the
purpose of effecting the conversion of the shares of the
Series A Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of the Series A Preferred
Stock, and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of the
Series A Preferred Stock, then in addition to such other
remedies as shall be available to the holder of such Series A
Preferred Stock, the Company will take such corporate action
as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such
purposes.
(h) Notices. In the event that the Company shall propose at any
time:
(i) to declare any dividend or distribution upon its
Common Stock, whether in cash, property, stock or
other securities, whether or not a regular cash
dividend and whether or not out of earnings or earned
surplus;
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(ii) to offer for subscription pro rata to the holders of
any class or series of its stock any additional
shares of stock of any class or series or any other
rights;
(iii) to effect any reclassification or recapitalization of
its Common Stock outstanding involving a change in
the Common Stock; or
(iv) to merge or consolidate with or into any other
Company, or sell, lease or convey all or
substantially all of its property or business, or to
liquidate, dissolve or wind up;
then, in connection with each such event, the Company
shall send to the holders of the Series A Preferred
Stock:
(A) at least twenty (20) days' prior written
notice of the date on which a record shall
be taken for such dividend, distribution or
subscription rights (and specifying the date
on which the holders of Common Stock shall
be entitled thereto) or for determining
rights to vote in respect of the matters
referred to in subsections (h)(iii) and
(h)(iv) above; and
(B) in the case of the matters referred to in
subsections (h)(iii) and (h)(iv) above, at
least twenty (20) days' prior written notice
of the date when the same shall take place
(and specifying the date on which the
holders of Common Stock shall be entitled to
exchange their Common Stock for securities
or other property deliverable upon the
occurrence of such events or the record date
for the determination of such holders if
such record date is earlier).
Any notice required by the provisions of this Section 6 to be given to
the holders of shares of Series A Preferred Stock shall be deemed given if sent
by facsimile, by telex, or if deposited in the United States mail, postage
prepaid, and addressed to each holder of record at his, her or its address
appearing on the books of the Company.
7. VOTING RIGHTS. Except as otherwise required by the DGCL, this Certificate of
Designation, or the Company's Certificate of Incorporation, the holders of the
Series A Preferred Stock shall have no voting rights, and no consent of any
holder shall be required for the taking of any corporate action.
8. WARRANT. In the event of conversion of the outstanding shares of Series A
Preferred Stock, the Company shall issue to each holder of Series A Preferred
Stock a one year warrant to purchase one (1) share of Common Stock at a strike
price of US $1.00 for each share of Common Stock (the "Warrants") for each two
(2) shares of Series A Preferred Stock so converted.
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9. RESTRICTIONS AND LIMITATIONS. So long as any shares of Series A Preferred
Stock shall be outstanding, the Company shall not, without first having obtained
the affirmative vote or written consent of the holders of at lease sixty-six and
two-thirds percent (66 2/3%) of the then outstanding shares of Series A
Preferred Stock, voting as a separate class:
(a) effect any amendment of the Company's Certificate of
Incorporation or By-Laws which would materially adversely
affect the rights of the Series A Preferred Stock; or
(b) amend, alter or repeal the preferences, special rights or
other powers of the Series A Preferred Stock so as to
adversely affect the holders of shares of Series A Preferred
Stock.
10. TRANSFERABILITY. The Series A Preferred Stock shall not be transferable by
the holders.
11. PAYMENT OF TAXES. The issuance and delivery of shares of Common Stock upon
conversion of shares of Series A Preferred Stock shall be made without charge to
the holder of Series A Preferred Stock for any issuance tax in respect thereof,
provided that the Company shall not be required to pay any tax which may be
payable in respect of any transfer and delivery of shares in a name other than
that of the holder of the Series A Preferred Stock that has been converted.
12. NOTICE TO THE COMPANY. Except as specifically set forth herein, all notices
or communications provided for or permitted hereunder shall be made in writing
by hand delivery, express overnight courier, registered first class mail, or
telecopier addressed (i) if to the Company, to its office at 243 Front Street,
San Francisco, CA 94111, Attention: J. Glenn Pogue, CEO, and (2) if to a holder
of the Series A Preferred Stock, to such holder at the address of such holder as
listed in the stock ledger of the Company or to such other address as the
Company or such holder, as the case may be, shall have designated by notice
similarly given. All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five (5)
business days after being deposited in the mail, registered or certified mail,
return receipt requested, postage prepaid, if mailed; when received after being
deposited in the regular mail; the next business day after being deposited with
an overnight courier, if deposited with a nationally recognized, overnight
courier service; when receipt is acknowledged, if by telecopier, so long as
followed upon the same day by overnight courier.
13. STATUS OF REDEEMED, CONVERTED OR UNISSUED SHARES OF SERIES A PREFERRED
STOCK. Any Series A Preferred Stock redeemed, purchased, converted or otherwise
acquired by the Company in any manner whatsoever shall not be reissued as part
of such Series A Preferred Stock and shall be retired promptly after the
acquisition thereof. Further, no shares of Series A Preferred Stock shall be
issued by the Company after June 15, 2005. Any shares of Series A Preferred
Stock that are not issued by June 15, 2005, shall return to the status of
undesignated shares of preferred stock of the Company.
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14. PREFERENCE RIGHTS. Nothing contained herein shall be construed to prevent
the Board of Directors of the Company from issuing one (1) or more additional
series of preferred stock of the Company.
(EXECUTION PAGE FOLLOWS)
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IN WITNESS WHEREOF, Tribeworks, Inc. has caused its corporate seal to
be hereunto affixed and this Certificate to be signed by J. Glenn Pogue, its
Chief Executive Officer and Peter Jacobson, its Secretary, as of this 24th day
of May, 2005.
/s/ J. GLENN POGUE
-----------------------------------
J. GLENN POGUE,
Chief Executive Officer
/s/ PETER JACOBSON
-----------------------------------
PETER JACOBSON,
Secretary
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