<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
MICROFIELD GRAPHICS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed per Exchange Act Rules 14a-6(i)(4) and 0-11.
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
<PAGE>
MICROFIELD GRAPHICS, INC.
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1998
------------------------
The Annual Meeting of Shareholders of Microfield Graphics, Inc., an Oregon
corporation (the "Company"), will be held on Wednesday, May 20, 1998 at 10:00
a.m., Pacific time, at the Company's offices, 7216 SW Durham Road, Portland, OR
97224, for the following purposes:
1. To elect four directors to serve until the next Annual Meeting of
Shareholders and until their successors are duly elected and qualified
(Proposal No. 1);
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only shareholders of record at the close of business on March 23, 1998 are
entitled to notice of and to vote at the meeting.
YOU ARE RESPECTFULLY REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND
RETURN IT IN THE POSTAGE-PREPAID ENVELOPE ENCLOSED FOR THAT PURPOSE. You may
attend the meeting in person even though you send in your proxy; retention of
the proxy is not necessary for admission to or identification at the meeting.
By Order of the Board of Directors:
Randall R. Reed
CHIEF FINANCIAL OFFICER AND SECRETARY
Portland, Oregon
April 23, 1998
<PAGE>
MICROFIELD GRAPHICS, INC.
----------------
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 20, 1998
------------------------
SOLICITATION AND REVOCABILITY OF PROXY
The enclosed Proxy is solicited on behalf of Microfield Graphics, Inc., an
Oregon corporation (the "Company"), for use at the Annual Meeting of
Shareholders (the "Annual Meeting") to be held on Wednesday, May 20, 1998 at
10:00 a.m., Pacific time, or at any adjournment thereof, for the purposes set
forth herein and in the accompanying notice of Annual Meeting. All expenses
associated with this solicitation will be borne by the Company. The solicitation
of proxies by mail may be followed by personal solicitation of certain
shareholders by officers or regular employees of the Company. Copies of
solicitation materials will be furnished to fiduciaries, custodians and
brokerage houses for forwarding to beneficial owners of the shares of the
Company's Common Stock held in their names.
The two persons named as proxies on the enclosed proxy card, John B. Conroy
and William P. Cargile, were designated by the Board of Directors. All properly
executed proxies will be voted (except to the extent that authority to vote has
been withheld), and where a choice has been specified by the shareholder as
provided in the proxy card, it will be voted in accordance with the
specification so made. Proxies submitted without specification will be voted FOR
Proposal No. 1 to elect the nominees for director proposed by the Board of
Directors.
A proxy may be revoked by a shareholder prior to its exercise by written
notice to the Secretary of the Company, by submission of another proxy bearing a
later date or by voting in person at the Annual Meeting. Such notice or later
proxy will not affect a vote on any matter taken prior to the receipt thereof by
the Company.
The mailing address of the principal executive offices of the Company is
7216 SW Durham Road, Portland, Oregon 97224. This Proxy Statement, the
accompanying Notice of Annual Meeting, the Proxy Card and a copy of the
Company's Annual Report are first being mailed on or about April 23, 1998 to
shareholders of record on March 23, 1998 of the Company's Common Stock.
VOTING AT THE MEETING
Shareholders of record at the close of business on March 23, 1998 (the
"record date") are entitled to notice of, and to vote at, the Annual Meeting.
The Company has one class of voting securities outstanding, designated Common
Stock. At the record date, 3,580,372 shares of the Company's Common Stock were
outstanding and entitled to vote. The Common Stock does not have cumulative
voting rights.
Each share of Common Stock outstanding on the record date is entitled to one
vote per share at the Annual Meeting. If a quorum is present at the Annual
Meeting the four nominees for election as directors who receive the greatest
number of votes cast will be elected directors.
With respect to the election of directors, directors are elected by a
plurality of the votes cast and only votes cast in favor of a nominee will have
an effect on the outcome. Therefore, abstention from voting or nonvoting by
brokers will have no effect thereon. Broker non-votes are counted for purposes
of determining whether a quorum exists at the Annual Meeting.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Stock of the Company as of February 28, 1998 as to (i) each
person who is known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) each director or nominee for director
of the Company, (iii) each of the executive officers named in the Summary
Compensation Table below and (iv) all directors and executive officers as a
group. Except as otherwise noted, the Company believes the persons listed below
have sole investment and voting power with respect to the Common Stock owned by
them.
<TABLE>
<CAPTION>
COMMON STOCK
----------------------------
SHARES APPROXIMATE
FIVE PERCENT SHAREHOLDERS, DIRECTORS, BENEFICIALLY PERCENTAGE
DIRECTOR NOMINEES AND CERTAIN EXECUTIVE OFFICERS OWNED(1) OWNED
- ------------------------------------------------------------------- ----------- ---------------
<S> <C> <C>
State Farm Mutual Automobile ...................................... 410,348 12.7%
Insurance Company
One State Farm Plaza
Bloomington, Illinois 61710
John. B. Conroy (2)(3)............................................. 162,033 5.0%
William P. Cargile (2)(4).......................................... 200,000 6.2%
Herbert S. Shaw (2)(5)............................................. -- *
Scott D. McVay (2)(6).............................................. 43,200 1.3%
Donald H. Zurstadt (2)(7).......................................... 24,554 *
All directors and executive officers as a group (7 persons) (8).... 484,390 14.5%
</TABLE>
- ------------------------
* Less than 1%
(1) Shares to which the person or group has the right to acquire within 60 days
after February 28, 1998 are deemed to be outstanding in calculating the
percentage ownership of the person or group but are not deemed to be
outstanding as to any other person or group.
(2) The address of Messrs. Conroy, Cargile, Shaw, McVay and Zurstadt is c/o
Microfield Graphics, Inc., 7216 SW Durham Road, Portland, Oregon 97224.
(3) Includes 93,939 shares held by Mr. Conroy's wife and 37,500 shares subject
to options exerciseable within 60 days after February 28, 1998.
(4) Includes 10,625 shares subject to options exerciseable within 60 days after
February 28, 1998.
(5) Includes 952 shares subject to options exerciseable within 60 days after
February 28, 1998.
(6) Includes 37,266 shares subject to options exerciseable within 60 days after
February 28, 1998.
(7) Includes 10,925 shares subject to options exerciseable within 60 days after
February 28, 1998.
(8) Includes 117,268 shares subject to options exerciseable within 60 days after
February 28 1998.
2
<PAGE>
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
In accordance with the Company's Bylaws, the Board of Directors shall
consist of no fewer than three and no more than eleven directors, the specific
number to be determined by resolution adopted by the Board of Directors. The
Board of Directors has set the number of directors at four.
Each director will serve until the next annual meeting of shareholders and
until his successor is duly elected and qualified.
NOMINEES FOR DIRECTOR
The names and certain information concerning the nominees for director are
set forth below. Shares represented by the proxies will be voted for the
election to the Board of Directors of the persons named below unless authority
to vote for a particular director or directors has been withheld in the proxy.
In the event of the death or unavailability of any nominee or nominees, the
proxy holders will have discretionary authority under the proxy to vote for a
substitute nominee. Proxies may not be voted for more than four nominees. The
Board of Directors has nominated the persons named in the following table to be
elected as directors.
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE POSITION WITH THE COMPANY
- --------------------------------- --- ------------------------------------------
<S> <C> <C>
John B. Conroy................... 59 Chairman of the Board, President and Chief
Executive Officer
William P. Cargile............... 56 Director
Herbert S. Shaw.................. 62 Director
James P. Keane................... 38 Director
</TABLE>
There is no family relationship among any of the directors or executive
officers of the Company.
JOHN B. CONROY joined the Company in May 1986 and was appointed President
and elected a Director that same month. Mr. Conroy was designated Chief
Executive Officer by the Board of Directors in January 1987, and appointed
Chairman of the Board of Directors in June 1996. Mr. Conroy previously held
executive management positions with a number of computer industry companies, has
served as a Director of several, and holds a BSEE from New York University.
WILLIAM P. CARGILE was elected to the Board of Directors in February 1989.
Mr. Cargile was a General Partner of Crosspoint Venture Partners from April 1983
until December 1995, at which time he became a Venture Partner of Crosspoint
Venture Partners.
HERBERT S. SHAW was appointed to the Board of Directors in June 1997. Mr.
Shaw has been the Managing Partner of NorCrest Ltd. and Chairman of NorCrest
Capital Management LLC, an investment banking company, since January 1996. From
February 1992 to December 1995 Mr. Shaw was the President and CEO of The
Laughlin Group, a financial services and investment group of companies.
JAMES P. KEANE was appointed to the Board of Directors in March 1998. Mr.
Keane has been the Vice President of Corporate Strategy and Development for
Steelcase Inc., a furniture manufacturing company, since January 1997. From 1992
to January 1997, Mr. Keane was Vice President and Chief Financial Officer of
Cloud Corporation, a packaging company. From 1987 to 1992, Mr. Keane was a
senior engagement officer at the consulting firm of McKinsey & Company, Inc.
BOARD MEETINGS AND COMMITTEES
The Board of Directors met three times during 1997. Each director attended
all of the meetings of the Board of Directors and all committees of which he was
a member. The standing committees of the Board
3
<PAGE>
of Directors are the Audit Committee and the Compensation Committee. The Company
does not have a nominating committee.
The Audit Committee makes recommendations concerning the engagement of the
independent public accountants, reviews with the independent public accountants
the plans and results of the audit engagement, approves professional services
provided by the independent public accountants, reviews the independence of the
independent public accountants, considers the range of audit and non-audit fees
and reviews the adequacy of the Company's internal accounting controls. The
Audit Committee consisted of Messrs. Conroy and Cargile until February 1998 and
currently consists of Messrs. Conroy, Cargile and Shaw. The Compensation
Committee determines compensation for the Company's executive officers. The
Compensation Committee consists of Messrs. Conroy and Cargile. The Audit
Committee met once during 1997. The Compensation Committee met once during 1997.
COMPENSATION OF DIRECTORS
The 1995 Stock Incentive Plan provides for the automatic grant of an option
to purchase 10,000 shares of Common Stock to each person who becomes a
non-employee director of the Company after April 24, 1996, provided that the
person has not previously served as a director of the Company. A "non-employee
director" is a director who is not an employee of the Company or any of its
subsidiaries. The plan also provides for the grant of an automatic option to
purchase an additional 3,000 shares of Common Stock to each incumbent
non-employee director who continues in office as a non-employee director
following an annual meeting of shareholders, starting with the 1997 Annual
Meeting. Mr. Cargile was granted an option for 3,000 shares in 1997, and Mr.
Shaw was granted an option for 10,000 shares in 1997.
Directors do not receive any fees for serving on the Company's Board of
Directors or any committee thereof, but are reimbursed for reasonable expenses
incurred in attending meetings.
EXECUTIVE OFFICERS OF THE REGISTRANT
The names, ages and positions of the Company's executive officers are as
follows:
<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION(S) WITH COMPANY
- ----------------------------------- --- ------------------------------------------
<S> <C> <C>
John B. Conroy..................... 59 Chairman of the Board, President and Chief
Executive Officer
Scott D. McVay..................... 58 Vice President, Sales
Randall R. Reed.................... 41 Chief Financial Officer and Secretary
Michael W. Stansell................ 55 Vice President, Operations
Donald H. Zurstadt................. 56 Vice President, Engineering
</TABLE>
For information on the business background of Mr. Conroy, see "Nominees for
Director" above.
SCOTT D. MCVAY joined the Company in December 1993 as Vice President, Sales.
Mr. McVay was Vice President, Marketing, at Mass Memory Technology, a
manufacturer of PC storage products, from December 1992 to November 1993, and
Vice President, Worldwide Sales, at Emulex Corp., a manufacturer of
telecommunications and memory products, from April 1990 to June 1992. Mr. McVay
was Vice President of Sales and Marketing at Iomega from 1983 through 1987, and
held various positions at IBM over 19 years. Mr. McVay holds a BS and an MBA in
marketing from the University of Colorado.
RANDALL R. REED joined the Company in August 1985 as Controller and became
the Company's Chief Financial Officer and Secretary in April 1990. Mr. Reed was
a Tax Supervisor, among other positions, at Coopers and Lybrand from August 1981
to February 1985. Mr. Reed is a Certified Public Accountant and holds a BS in
business administration from Southern Oregon State College.
4
<PAGE>
MICHAEL W. STANSELL joined the Company in November 1985 as Director of
Manufacturing and was appointed Vice President, Operations, in January 1987. Mr.
Stansell was a division manufacturing manager, among other positions, at
Tektronix Corporation from August 1965 through October 1985.
DONALD H. ZURSTADT joined the Company in September 1989 as Manager of
Engineering and was appointed Vice President, Engineering, in April 1990. Mr.
Zurstadt has held management and engineering positions with several computer
industry companies over the past 30 years including Tektronix, Inc., McDonnell
Douglas Automation Corporation and Digital Equipment Corporation. Mr. Zurstadt
holds a BA in physics from the University of Colorado.
EXECUTIVE COMPENSATION AND OTHER MATTERS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation awarded to, earned by or paid to the Company's Chief Executive
Officer and other executive officers of the Company whose total annual salary
and bonus exceeded $100,000 (collectively, the "named officers") for fiscal
years 1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
-------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING ALL OTHER
------------------------------------- OPTIONS COMPENSATION
FISCAL YEAR SALARY($)(1) BONUS($) (#)(2) ($)(3)
----------- ----------- ----------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
John B. Conroy..................................... 1997 206,000 -- 60,000 --
Chairman of the Board of Directors, 1996 205,539 -- -- --
President, and Chief Executive Officer 1995 186,538 50,000 -- --
Scott D. McVay (4)................................. 1997 131,000 -- 20,000 --
Vice President, Sales 1996 153,528 -- -- --
1995 143,053 10,000 -- --
Donald H. Zurstadt................................. 1997 107,000 -- 25,000 --
Vice President, Engineering 1996 106,628 -- -- --
1995 95,289 -- -- --
</TABLE>
- ------------------------
(1) All amounts shown as salary in 1995 include the effect of a voluntary 50
percent decrease in salaries paid during the seven weeks ended April 1,
1995.
(2) Stock options awarded to Messrs. Conroy, McVay and Zurstadt in 1996 in the
amounts of 60,000, 10,000 and 15,000, respectively, at $4.375 per share were
canceled and then repriced by vote of the Board of Directors in February
1997 at the then-current market price of $1.75 per share.
(3) The aggregate amount of perquisites and other personal benefits was less
than either $50,000 or 10% of the total of the annual salary and bonus
reported for each of the named officers.
(4) Included in salary amounts for Mr. McVay are commissions of $22,913, and
$25,534, respectively, for 1996 and 1995.
OPTIONS GRANTED IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock
options under the Company's 1995 Stock Incentive Plan and the Company's 1986
Stock Option Plan during fiscal 1997 to the named
5
<PAGE>
officers. All current executive officers as a group received options
exerciseable for 149,000 shares of the Company's Common Stock during fiscal
1997. All employees who are not currently executive officers of the Company
received options exerciseable for a total of 256,906 shares of the Company's
Common Stock during fiscal 1997.
Of the total of 405,906 options granted to employees in 1997, 252,706
options were replacements for options previously granted in 1996 that were
canceled and then regranted by vote of the Board of Directors in February 1997
at the then-current market price of $1.75. The Compensation Committee of the
Board of Directors voted to reprice the options primarily because the Company's
share price had fallen substantially below the exercise price of the options for
an extended period of time, so that the options lost the incentive effect for
which they were originally granted.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED(2) FISCAL YEAR ($/SHARE) DATE
- -------------------------------- ----------- --------------- ----------- --------------------
<S> <C> <C> <C> <C>
John B. Conroy.................. 60,000(1) 14.8% 1.75 February 19, 2002
Scott D. McVay.................. 10,000(1) 2.5% 1.75 February 19, 2002
10,000(2) 2.5% 1.25 April 23, 2002
Donald H. Zurstadt.............. 15,000(1) 3.7% 1.75 February 19, 2002
10,000(2) 2.5% 1.25 April 23, 2002
</TABLE>
- ------------------------
(1) Options granted in February 1997 to the named officers are exerciseable from
time to time in the following amounts: 1) 16/48ths of the shares
immediately; 2) thereafter an additional 1/48th of the shares, each month
through October 10, 1999. Under the Company's 1995 Stock Incentive Plan and
the Company's 1986 Stock Incentive Plan, the Board of Directors retains
discretion, subject to plan limits, to modify the terms of outstanding
options. Options are granted for a term of five years, subject to earlier
termination as a result of termination of employment, death or disability.
The stock options, awarded to Messrs. Conroy, McVay and Zurstadt, in August
1996 at $4.375 per share were canceled and then regranted by vote of the
Board of Directors in February 1997 at the then-current market price of
$1.75 per share.
(2) Options granted in April 1997 to the named officers are exerciseable from
time to time in the amount of 1/48 of the shares per month, each month
through April 22, 2001. Under the Company's 1995 Stock Incentive Plan and
the Company's 1986 Stock Incentive Plan, the Board of Directors retains
discretion, subject to plan limits, to modify the terms of outstanding
options. Options are granted for a term of five years, subject to earlier
termination as a result of termination of employment, death or disability.
The stock options granted to the named officers were granted at the current
market price on the date of grant.
6
<PAGE>
OPTION EXERCISE AND HOLDINGS
The following table provides information concerning the exercise of options
during fiscal 1997 and unexercised options held as of the end of the fiscal year
with respect to the named officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
SHARES ACQUIRED VALUE AT FY-END(#) AT FY-END($)(2)
ON EXERCISE REALIZED EXERCISEABLE/ EXERCISEABLE/ GRANT EXPIRATION
NAME (#) ($)(1) UNEXERCISEABLE UNEXERCISEABLE DATE(3) DATE(3)
- ----------------------------- ----------------- ----------- -------------------- -------------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John B. Conroy............... -- -- 32,500 27,500 71,094 60,156 2/97 2/02
Scott D. McVay............... -- -- 28,516 -- 76,295 -- 12/93 12/98
-- -- 5,417 4,583 11,849 10,026 2/97 2/02
-- -- 1,667 8,333 4,479 22,396 4/97 4/02
Donald H. Zurstadt........... 3,170 4,717 -- -- -- -- 6/93 6/98
1,450 3,172 217 8,333 582 22,396 4/97 4/02
-- -- 8,125 6,875 17,773 15,039 2/97 2/02
</TABLE>
- ------------------------
(1) Market value of the underlying securities at exercise date, minus exercise
price of the options.
(2) Market value of the underlying securities at January 3, 1998, $3.9375 per
share, minus exercise price of the unexercised options.
(3) The Company elected to add these columns for clarification.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's executive officers and directors, and persons who own
more than ten percent of a registered class of the Company's equity securities
to file reports of ownership and changes in ownership with the Securities and
Exchange Commission ("SEC"). Executive officers, directors and greater than ten
percent stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on its review of the
copies of such forms received by it, or written representations from certain
reporting persons, the Company believes that, during 1997, all executive
officers, directors and greater than 10% shareholders complied with all
applicable filing requirements with the exception of one late Form 4 filing by
Mr. Mallicoat, who was a director of the Company for the first seven months of
1997.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP audited the Company's financial statements for the
fiscal year ended January 3, 1998 and has been selected to do the same for
fiscal year ended January 2, 1999. Representatives of Price Waterhouse LLP will
be present at the Annual Meeting and will be available to respond to appropriate
questions. They do not expect to make any statement but will have the
opportunity to make a statement if they wish.
7
<PAGE>
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of shareholders intended to be presented at the Company's 1999
Annual Meeting of Shareholders must be received by the Company at its principal
office no later than December 21, 1998 to be considered for inclusion in the
proxy statement and form of proxy relating to that meeting.
COPIES OF FORM 10-KSB
All shareholders are entitled to a copy of the Company's Form 10-KSB filed
with the Securities and Exchange Commission. If you would like a copy, one will
provided without charge upon request to: Investor Relations, Microfield
Graphics, Inc., 7216 SW Durham Rd., Portland, OR 97224. For additional
information on how to access the company's SEC filings over the internet, please
contact Randy Reed via e-mail at [email protected].
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting. If any
other matters properly come before the meeting, the persons named in the
enclosed form of Proxy will have the discretionary authority to vote in
accordance with their judgment.
By Order of the Board of Directors:
Randall R. Reed
CHIEF FINANCIAL OFFICER AND SECRETARY
Dated: April 23, 1998
8
<PAGE>
MICROFIELD GRAPHICS, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 20, 1998
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated April 23, 1998 and hereby names,
constitutes and appoints John B. Conroy and William P. Cargile, or either of
them acting in absence of the other, with full power of substitution, my true
and lawful attorneys and Proxies for me and in my place and stead to attend the
Annual Meeting of the Shareholders of Microfield Graphics, Inc. (the "Company")
to be held at 10:00 a.m. on Wednesday, May 20, 1998, and at any adjournment
thereof, and to vote all the shares of Common Stock held of record in the name
of the undersigned on March 23, 1998, with all the powers that the undersigned
would possess if he were personally present.
<TABLE>
<CAPTION>
<S><C>
1. PROPOSAL 1--Election of Directors / / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as marked to the contrary below) (to vote for all nominees listed below)
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME
BELOW.)
JOHN B. CONROY WILLIAM P. CARGILE HERBERT S. SHAW JAMES P. KEANE
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE NOMINEES
NAMED ABOVE.
</TABLE>
2. Upon such other matters as may properly come before, or incident to the
conduct of the Annual Meeting, the Proxy holders shall vote in such manner
as they determine to be in the best interests of the Company. The Company
is not presently aware of any such matters to be presented for action at
the meeting.
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY. IF NO
SPECIFIC DIRECTION IS GIVEN AS TO ANY OF THE ABOVE ITEMS, THIS PROXY WILL BE
VOTED FOR EACH OF THE NOMINEES NAMED IN PROPOSAL 1.
Dated
--------------------------------
-------------------------------------
Shareholder (print name)
-------------------------------------
Shareholder (sign name)
I do ( ) do not ( ) plan to attend
the meeting.
(Please check)
The shareholder signed above reserves
the right to revoke this Proxy at any
time prior to its exercise by written
notice delivered to the Company's
Secretary at the Company's corporate
offices at 7216 SW Durham Road,
Portland, Oregon 97224, prior to the
Annual Meeting. The power of the Proxy
holders shall also be suspended if the
shareholder signed above appears at the
Annual Meeting and elects in writing to
vote in person.
