EXHIBIT 3.3
STATEMENT OF RESOLUTION
ESTABISHING SERIES OF PREFERRED STOCK
OF
MICROGRAFX, INC.
TO THE SECRETARY OF STATE
OF THE STATE OF TEXAS:
Pursuant to the provisions of Article 2.13 of the Texas Business
Corporation Act, the undersigned Corporation submits the following statement for
the purpose of establishing and designating a series of Preferred Stock and
fixing and determining the rights and preferences thereof:
1. The name of the Corporation is Micrografx, Inc. (the "Corporation").
2. The following resolution establishing and designating a series of
shares of Preferred Stock and fixing and determining the relative
rights and preferences thereof, was duly adopted by the Board of
Directors of the Corporation (the "Board") as of August 30, 2000, such
Board approval being all necessary action on the part of the
Corporation to adopt such resolution:
"RESOLVED, that pursuant to the authority expressly granted to and vested in the
Board of Directors of this Corporation, in accordance with the provisions of its
Articles of Incorporation, as amended, a series of Preferred Stock, with a par
value of $0.01 per share, of the Corporation be, and hereby is, established and
given the distinctive designation of Series A Convertible Preferred Stock (the
"Series A Preferred Stock). This Series consists of four million (4,000,000)
shares with the following rights and preferences:
1. DIVIDENDS ON SERIES A PREFERRED STOCK. The holders of shares of Series A
Preferred Stock shall be entitled to receive out of funds legally available for
declaration of dividends, cumulative dividends in cash, when, as and if declared
by the Board of Directors of the Corporation (the "Board"), at the annual rate
of $0.09 per share, payable upon the earliest of (a) conversion of the Series A
Preferred Stock, (b) redemption of the Series A Preferred Stock, or (c) upon a
Liquidation (as defined below), or earlier if the Corporation elects to do so.
Such dividends shall commence to accrue on the shares of Series A Preferred
Stock and be cumulative from and after the date of issuance of such shares of
Series A Preferred Stock and shall be deemed to accumulate and shall be payable
for any period less than a full year on the basis of a year of 360 days with
equal 30 day months.
2. PREFERENCE ON LIQUIDATION, DISSOLUTION OR WINDING UP.
A. DEFINITION. A consolidation or merger of the Corporation or a sale
or transfer of substantially all of its assets as an
entirety, shall not be regarded as Liquidation (as defined below)
within the meaning of this Section 3. As used herein, "Liquidation"
shall mean any liquidation, dissolution or winding up of the affairs
of the Corporation.
B. RANKING. With respect to dividends, redemption rights and the
distribution of assets upon a Liquidation, the Series A Preferred
Stock shall rank senior to all other capital stock of the Corporation.
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C. LIQUIDATION. During any proceedings for a Liquidation, the
holders of the Series A Preferred Stock shall be entitled to receive
$1.50, plus any dividends accrued but not paid prior to the date of
Liquidation, in cash for each share of Series A Preferred Stock (the
"Liquidation Value"), before any distribution of the assets of the
Corporation shall be made to the holders of any shares of the other
capital stock of the Corporation, or funds necessary for such payment
shall have been set aside in trust for the account of the holders of
the outstanding Series A Preferred Stock so as to be and continue
available therefor. If upon such liquidation, dissolution or winding
up, the assets distributable to the holders of the Series A Preferred
Stock shall be insufficient to permit the payment to them of the
Liquidation Value per share, the assets of the Corporation shall be
distributed to the holders of the Series A Preferred Stock ratably
until they shall have received the full amount to which they would
otherwise be entitled. If the assets of the Corporation are sufficient
to permit the payment of such amounts to the holders of the Series A
Preferred Stock, the remainder of the assets of the Corporation, if
any, after the distributions as aforesaid shall be distributed and
divided ratably among the holders of the other capital stock of the
Corporation then outstanding according to their respective shares.
3. VOTING RIGHTS. Other than as specifically provided below in this Section 3 or
as required by law, the holders of shares of Series A Preferred
Stock ("Series A Preferred Stockholder") shall have no voting rights:
A. The consent of the holders of a majority of the outstanding
shares of Series A Preferred Stock ("Majority Preferred Stockholder"),
acting as a single class, given in person or by proxy, either in
writing without a meeting or by vote at any meeting called for the
purpose, shall be necessary in advance for effecting or validating (i)
changes in the designations, preferences, limitations or relative
rights of the shares of the Series A Preferred Stock, (ii) increase in
the aggregate number of authorized shares of the Series A Preferred
Stock or (iii) the creation of a new class of shares having rights and
preferences equal, prior or superior to the Series A Preferred Stock.
B. The Majority Preferred Stockholder shall have the exclusive
right, voting as a single class, to elect two directors of the
Corporation.
4. REDEMPTION.
A. MANDATORY REDEMPTION. Any Series A Preferred Stockholder may
require, at such holders' sole discretion, the Corporation to redeem
all, or any portion of, its outstanding shares of Series A Preferred
Stock at a price equal to the Liquidation Value, upon the occurrence of
a Sale (as defined below) or Merger (as defined below). The Corporation
shall give each Series A Preferred Stockholder at least 20 days prior
written notice of the closing date of any Sale or Merger. Each Series A
Preferred Stockholder electing to have its shares of Series A Preferred
Stock redeemed as a result of any Sale or Merger must give the
Corporation written notice of its election to require such redemption
within 10 days of the date of the notice of any Sale or Merger or shall
be deemed to have waived such right. The redemption of the Series A
Preferred Stock requested to be redeemed pursuant to this Section 4.A.
shall be made on the closing date of the Sale or Merger triggering such
redemption rights.
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B. OPTIONAL REDEMPTION. Subject to the prior right of any Series A
Preferred Stockholder to convert the Series Preferred Stock, on or
after March 1, 2001, the Corporation shall have the right to redeem the
Series A Preferred Stock in full, but not in part, at the Liquidation
Value in the event that the average Closing Price (as defined below) of
the Corporation's Common Stock, $0.01 par value ("Common Stock") for a
period of at least sixty (60) trading days shall be twenty-five percent
(25%) higher than the Conversion Price in effect during such period. At
least 20 days prior to this redemption of shares of Series A Preferred
Stock, the Corporation shall transmit notice to each holder of record
of the shares of Series A Preferred Stock at such holder's address set
forth in the stock records of the Corporation sent by first class mail
postage prepaid. Such notice shall state the date fixed for redemption
(the "Redemption Date") and the redemption price and shall call upon
the holder to surrender to the Corporation on the Redemption Date at
the place designated in the notice such holder's certificate or
certificates representing shares of Series A Preferred Stock. On or
after the Redemption Date, each holder of shares of Series A Preferred
Stock shall surrender the certificate or certificates evidencing such
shares to the Corporation at the place designated in such notice in
exchange for payment of the Redemption Price. At any time on or prior
to the Redemption Date, each Series A Preferred Stockholder shall have
the ability to convert its Series A Preferred Stock into shares of
Common Stock or Image2Web Stock (as defined below) as provided herein.
As used herein, "Closing Price" shall mean the per share closing price
of the Common Stock on The NASDAQ Stock Market or such other exchange
or market on which the Common Stock is so traded.
5. RETIREMENT OF SHARES. Any shares of Series A Preferred Stock
redeemed, purchased or otherwise acquired by the Corporation shall be deemed
retired and shall be canceled and may not under any circumstances thereafter
be reissued or otherwise disposed of by the Corporation.
6. CONVERSION.
A. CONVERSION RATIO. Any Series A Preferred Stockholder may elect
to convert all or any portion (in blocks of at least 10,000 shares) of
its shares of Series A Preferred Stock as hereinafter provided in this
Section 6. Subject to adjustment pursuant to Section 6.B., each share
of Series A Preferred Stock shall be converted into the number of
shares determined by dividing $1.50 by the lesser of (i) the Reset
Conversion Price (as defined below) in effect as of the date of
conversion and (ii) the Conversion Price (as defined below) in effect
as of the date of conversion. As used herein, "Reset Conversion Price"
shall mean the greater of (a) $1.00 or (b) the average Closing Price of
the Common Stock for the thirty day period ending the day immediately
preceding the date of conversion of the Series A Preferred Stock;
provided, that, if the Corporation shall effect a transaction described
in Section 6.B.1. below, clause (a) of this definition of Reset
Conversion Price shall be multiplied by the same fraction by which the
Conversion Price is multiplied in Section 6.B.1. below.
B. ANTI-DILUTION. The Conversion Price is subject to
adjustment from time to time upon the occurrence of any of the
events enumerated in this Section 6.B.
1. In the event that the Corporation shall (a) declare a
dividend on the Common Stock in shares of its capital stock
(whether shares of such Common Stock or of capital stock of any
other class of the Corporation), (b) split or subdivide the
outstanding Common Stock, or (c) combine the outstanding Common
Stock into a smaller number of shares, then (as a result of an
event described in (a), (b) or (c)) the Conversion Price shall be
adjusted to equal the product of the Conversion Price in effect
immediately prior to such event multiplied by a fraction the
numerator of which is equal to the number of shares of Common
Stock outstanding on a Fully Diluted Basis immediately prior to
the event and the denominator of which is equal to the number of
shares of Common Stock outstanding on a Fully Diluted Basis
immediately after such event.
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2. In the event that the Corporation shall (a) issue (other
than Exempt Shares (as defined below)) any shares of Common Stock
without consideration or at a price per share less than the
Conversion Price (as defined below) immediately prior to such
issuance, or (b) issue (other than Exempt Shares) options, rights
or warrants to subscribe for or purchase such Common Stock (or
securities convertible into such Common Stock) without
consideration or at a price per share (or having a conversion
price per share, if a security convertible into such Common Stock)
less than the Conversion Price immediately prior to such issuance,
then the Conversion Price shall be reduced to an amount obtained
by multiplying the Conversion Price by a fraction (aa) the
numerator of which is the number of shares of Common Stock
outstanding on a Fully Diluted Basis immediately prior to the such
issuance PLUS the number of shares of Common Stock, if any, which
the aggregate consideration, if any, received by the Corporation
in connection with such issuance would purchase at the Conversion
Price, and (bb) the denominator of which is the total number of
shares of Common Stock outstanding on a Fully Diluted Basis
immediately after such issuance. In case such subscription price
may be paid in a consideration part or all of which shall be in a
form other than cash, the value of such consideration shall be as
determined by an investment banking firm reasonably acceptable to
the Majority Preferred Stockholder (the cost of the engagement of
said investment banking firm to be borne by the Corporation).
Shares of such Common Stock owned by or held for the account of
the Corporation or any subsidiary thereof shall not be deemed
outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever the date of such
issuance is fixed (which date of issuance shall be the record date
for such issuance if a record date therefor is fixed); and, in the
event that such shares or options, rights or warrants are not so
issued, the Conversion Price shall again be adjusted to be the
Conversion Price if the date of such issuance had not been fixed.
3. No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at
least one-tenth of one percent (.1%) in the total number of shares
of Common Stock that would be issued as a result of the conversion
of all of the shares of Series A Preferred Stock; PROVIDED that
any adjustments which by reason of this section are not required
to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this section shall
be made to the nearest hundredth of one percent.
4. In the event of any capital reorganization of the
Corporation, or of any reclassification of any Common Stock for
which the Series A Preferred Stock is convertible (other than a
subdivision or combination of outstanding shares of such Common
Stock), or in case of the consolidation of the Corporation with or
the merger of the Corporation with or into any other corporation
or of the sale of the properties and assets of the Corporation as,
or substantially as, an entirety to any other entity, each share
of Series A Preferred Stock shall after such capital
reorganization, reclassification of such Common Stock,
consolidation, merger or sale be convertible, upon the terms and
conditions specified in this Agreement, into the number of shares
of stock or other securities or assets to which a holder of the
number of shares of Common Stock into which such shares of Series
A Preferred Stock are convertible (at the time of such capital
reorganization, reclassification of such Common Stock,
consolidation, merger or sale) would have been entitled upon such
capital reorganization, reclassification of such Common Stock,
consolidation, merger or sale; and in any such case, if necessary,
the provisions set forth in this Section 6.B. with respect to the
rights thereafter of such shares of Series A Preferred Stock shall
be appropriately adjusted so as to be applicable, as nearly as may
reasonably be, to any shares of stock or other securities or
assets thereafter deliverable upon the conversion of the Series A
Preferred Stock. The Corporation shall not effect any such
consolidation, merger or sale, unless prior to or
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simultaneously with the consummation thereof, the successor
corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such assets
or the appropriate corporation or entity shall assume, by written
instrument, the obligation to deliver to each holder of Series A
Preferred Stock the shares of stock, securities or assets to
which, in accordance with the foregoing provisions, such holder of
Series A Preferred Stock may be entitled pursuant to this section.
5. If any question shall at any time arise with respect to the
adjusted Conversion Price, such question shall be determined by
the independent firm of certified public accountants of recognized
national standing selected by the Majority Preferred Stockholder
and acceptable to the Corporation.
6. As used in this Section 6.B., the following terms shall
have the following meanings:
(i) "Conversion Price" shall initially mean $1.50 per
share; provided, that, such Conversion Price is subject to
adjustment as provided in this Section 6.B.
(ii) "Exempt Shares" means (a) all shares of Common Stock
issued upon (1) exercise of all options, warrants or other
rights to acquire Common Stock or (2) conversion of all
securities convertible into Common Stock, which such options,
warrants, rights or convertible securities are issued and
outstanding as of August 31, 2000, and (b) all options to
purchase shares of Common Stock issued to employees, directors
and consultants of the Corporation and its subsidiaries after
August 31, 2000 and the shares of Common Stock issued upon
exercise thereof.
(iii) "Fully Diluted Basis" means, with reference to
outstanding Common Stock, the shares of Common Stock that
would be outstanding assuming that all outstanding options,
warrants and other rights to acquire Common Stock had been
exercised (to the extent such rights are then exercisable) and
all securities convertible into Common Stock had then been
converted (to the extent such securities are then convertible)
and had been issued.
C. MECHANICS OF CONVERSION. Each holder of Series A Preferred
Stock electing to convert shall surrender the certificate or
certificates therefor at the Corporation's offices at any time during
normal business hours. Upon delivery of the certificate or certificates
to the Corporation, each holder of Series A Preferred Stock electing to
convert shall also state the name or names (with addresses) in which
the certificate or certificates evidencing ownership of Common Stock
shall be issued. Thereupon the Corporation shall promptly issue and
deliver, or cause to be issued and delivered, to such holder a
certificate or certificates for the number of whole shares of Common
Stock to which such holder is entitled under the terms of this Section
6. To the extent permitted by law, such conversion shall be deemed to
have been made immediately prior to the close of business on the date
of such surrender of the certificate representing the shares of Series
A Preferred Stock to be converted, and the person entitled to receive
the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder of such shares of Common
Stock on such date.
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D. REORGANIZATIONS, MERGERS OR SALES OF ASSETS. If at any time or
from time to time there is a capital reorganization of the Common Stock
or a Merger (as defined below) or a Sale (as defined below), then, as a
part of such reorganization, Merger or Sale, provision shall be made so
that the holders of the Series A Preferred Stock shall thereafter be
entitled to receive upon conversion of each share of Series A Preferred
Stock held, the number of shares of stock or other securities or
property of the Corporation, or of the successor corporation resulting
from such reorganization, Merger or Sale, to which a holder of the
number of shares of Common Stock that could otherwise have been
acquired upon conversion of a share of Series A Preferred Stock would
have been entitled on such reorganization, Merger or Sale. In any such
case, appropriate adjustment shall be made 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 reorganization, Merger or
Sale to the end that the provisions of this Section 6 (including
adjustment of the number of shares of Common Stock issuable upon
conversion of the Series A Preferred Stock) shall be applicable after
the event and be as nearly equivalent as may be practicable. A "Sale"
shall mean the sale, lease, assignment or transfer of all or
substantially all of the Corporation's assets approved by the Board and
the Corporation's stockholders. A "Merger" shall mean the acquisition
of the Corporation by another entity by way of merger, consolidation,
or other business combination resulting in the exchange of the
outstanding shares of the Corporation for securities or consideration
issued, or caused to be issued, by the acquiring corporation or its
parent or subsidiary.
E. FRACTIONAL SHARES. No fractional shares or script of Common
Stock shall be issued upon conversion of Series A Preferred Stock. In
lieu of a fractional share of Common Stock to which the holder would
otherwise be entitled, the Corporation shall pay cash equal to the
product of such fraction multiplied by the fair market value of one
share of Common Stock on the date of conversion as determined in good
faith by the Board.
F. RESERVATION OF COMMON STOCK. The Corporation 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 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 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 Series A Preferred Stock, the Corporation 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 purpose.
G. CANCELLATION OF CONVERTED SHARES. Shares of Series A
Preferred Stock converted into Common Stock shall be canceled and
may not thereafter be reissued and the number of authorized shares of
Series A Preferred Stock shall be correspondingly reduced.
H. STOCK FULLY PAID. All shares of Common Stock that may be issued
upon conversion of the Series A Preferred Stock will, upon issuance, be
fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issue thereof (other than restrictions
under federal and state securities laws).
7. CONVERSION INTO COMMON STOCK OF IMAGE2WEB, INC. (THE "IMAGE2WEB"). As an
alternative to the conversion of the Series A Preferred Stock into shares of
Common Stock provided in Section 6 hereof, any Series A Preferred Stockholder
may elect to convert a portion (in blocks of at least 10,000 shares) of its
shares of Series A Preferred Stock but not more than 50% (fifty percent) of all
shares Series A Preferred Stock held by such Series A Preferred Stockholder into
shares of common stock of Image2Web owned by the Corporation (the "Image2Web
Stock"). Each share of Series A Preferred Stock shall be convertible into 0.698
shares of Image2Web Stock. Any Series A Preferred Stockholder electing to
convert into Image2Web Stock shall follow the conversion procedures outlined in
Section 6.C. hereof. So long as any shares of Series A Preferred Stock are
outstanding, the Corporation shall own enough Image2Web stock to honor the
conversion rights set forth in this Section 7.
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IN WITNESS WHEREOF, the undersigned has executed this Statement as of
the 1st day of September, 2000.
MICROGRAFX, INC.
By: /S/ JOHN M. CARRADINE
-----------------------
Name: John M. Carradine
Title: Chief Financial
Officer
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