UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
Microfield Graphics, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- --------------------------------------------------------------------------------
(Title of Class of Securities)
59506w1
-------------------------------------------------------
(CUSIP Number)
Randall R. Reed, 7216 SW Durham Road, Portland, Oregon 97224 (503)620-4000
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
March 26, 1999
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 59506w1 Page 2 of 3 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
William P. Cargile Michael Stansell
John B. Conroy Ross K. Summers
Randall R. Reed Donald Zurstadt
Herbert S. Shaw
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ X ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION All of the reporting persons are
United States citizens.
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
William P. Cargile - 0 Michael Stansell - 0
John B. Conroy - 0 Ross K. Summers - 0
Randall R. Reed - 0 Donald Zurstadt - 0
Herbert S. Shaw - 0
--------------------------------------------------------------------
8 SHARED VOTING POWER
William P. Cargile - 1,322,725 Michael Stansell - 1,322,725
NUMBER OF John B. Conroy - 1,322,725 Ross K. Summers - 1,322,725
SHARES Randall R. Reed - 1,322,725 Donald Zurstadt - 1,322,725
BENEFICIALLY Herbert S. Shaw - 1,322,725
OWNED BY --------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING William P. Cargile - 190,000 Michael Stansell - 22,603
PERSON John B. Conroy - 45,000 Ross K. Summers - 0
WITH Randall R. Reed - 5,001 Donald Zurstadt - 17,643
Herbert S. Shaw - 0
--------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
William P. Cargile - 0 Michael Stansell - 0
John B. Conroy - 91,033 Ross K. Summers - 0
Randall R. Reed - 0 Donald Zurstadt - 0
Herbert S. Shaw - 0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
William P. Cargile - 1,714,594 Michael Stansell - 1,714,594
John B. Conroy - 1,714,594 Ross K. Summers - 1,714,594
Randall R. Reed - 1,714,594 Donald Zurstadt - 1,714,594
Herbert S. Shaw - 1,714,594
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
37.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
All reporting persons are IN.
- --------------------------------------------------------------------------------
<PAGE>
This Amendment No. 2 is being filed to amend the Schedule 13D by the
Reporting Persons (as defined herein) on March 30, 1998, as amended on April 16,
1998. All references made herein to the "Original 13D filing" refer to the
Schedule 13D filed on March 30, 1998.
Item 1. Security and Issuer
This statement relates to the Common Stock ("Common Stock") of Microfield
Graphics, Inc., a corporation organized under the laws of Oregon (the
"Company"). The Company's principal executive offices are located at 7216 SW
Durham Road, Portland, Oregon 97224.
Item 2. Identity and Background
This Statement is filed by William P. Cargile, John B. Conroy, Randall R.
Reed, Herbert S. Shaw, Michael Stansell, Ross K. Summers and Donald Zurstadt,
individuals (the "Reporting Persons"). Messrs. Cargile, Conroy, Reed, Shaw,
Stansell, Summers and Zurstadt are part of a group that also includes Steelcase
Inc., a Michigan corporation ("Steelcase"). Steelcase is filing an amended Form
13D separately.
Mr. Cargile is a director of the Company, whose principal executive offices
are located at 7216 SW Durham Road, Portland, Oregon 97224. Mr. Cargile is a
citizen of the United States of America. Mr. Cargile has not been convicted in a
criminal proceeding in the last five years (excluding traffic violations or
similar misdemeanors). Mr. Cargile has not been a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction nor as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
Mr. Conroy is President and Chief Executive Officer, as well as a director,
of the Company, whose principal executive offices are located at 7216 SW Durham
Road, Portland, Oregon 97224. Mr. Conroy is a citizen of the United States of
America. Mr. Conroy has not been convicted in a criminal proceeding in the last
five years (excluding traffic violations or similar misdemeanors). Mr. Conroy
has not been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction nor as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
Mr. Reed is Chief Financial Officer of the Company, whose principal
executive offices are located at 7216 SW Durham Road, Portland, Oregon 97224.
Mr. Reed is a citizen of the United States of America. Mr. Reed has not been
convicted in a criminal proceeding in the last five years (excluding traffic
violations or similar misdemeanors). Mr. Reed has not been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction nor as
1
<PAGE>
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
Mr. Shaw is a director of the Company, whose principal executive offices
are located at 7216 SW Durham Road, Portland, Oregon 97224. Mr. Shaw is a
citizen of the United States of America. Mr. Shaw has not been convicted in a
criminal proceeding in the last five years (excluding traffic violations or
similar misdemeanors). Mr. Shaw has not been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction nor as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
Mr. Stansell is Vice President of Operations of the Company, whose
principal executive offices are located at 7216 SW Durham Road, Portland, Oregon
97224. Mr. Stansell is a citizen of the United States of America. Mr. Stansell
has not been convicted in a criminal proceeding in the last five years
(excluding traffic violations or similar misdemeanors). Mr. Stansell has not
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction nor as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
Mr. Summers is Vice President, Sales and Marketing of the Company, whose
principal executive offices are located at 7216 SW Durham Road, Portland, Oregon
97224. Mr. Summers is a citizen of the United States of America. Mr. Summers has
not been convicted in a criminal proceeding in the last five years (excluding
traffic violations or similar misdemeanors). Mr. Summers has not been a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction nor as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Mr. Zurstadt is Vice President of Engineering of the Company, whose
principal executive offices are located at 7216 SW Durham Road, Portland, Oregon
97224. Mr. Zurstadt is a citizen of the United States of America. Mr. Zurstadt
has not been convicted in a criminal proceeding in the last five years
(excluding traffic violations or similar misdemeanors). Mr. Zurstadt has not
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction nor as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
2
<PAGE>
Item 3. Source and Amount of Funds or Other Consideration
Not applicable.
Item 4. Purpose of Transaction
The Reporting Persons entered into an Amended and Restated Share Ownership,
Voting and Right of First Refusal Agreement with the Company and Steelcase dated
as of March 25, 1999 (the "Voting Agreement") as inducement for Steelcase to
purchase additional shares of the Company's Common Stock. The Voting Agreement
is attached hereto as Exhibit A and is incorporated herein by reference.
Pursuant to the Voting Agreement, Steelcase and the Reporting Persons will vote
all of their shares of Common Stock to elect certain individuals to the Board of
Directors of the Company, including one individual designated by Steelcase, the
current Chief Executive Officer of the Company or his successor and three
independent directors (including two current directors) as designated by the
majority of the directors then in office. With regard to matters other than the
election of directors, Steelcase has agreed to vote all shares of Common Stock
that it may own in excess of 1,054,445 shares in proportion to the votes of all
other outstanding shares of Common Stock. Also pursuant to the Voting Agreement,
Steelcase has a right of first refusal for any proposed sale of shares of Common
Stock by the Reporting Persons and a right of first offer for any proposed
issuance of shares of Common Stock by the Company, subject to exceptions for
certain issuances. Under the Amended Voting Agreement, Steelcase has also agreed
that it will not transfer any shares of Common Stock until March 19, 2000, to
any transferees other than (a) to affiliates of Steelcase or (b) up to 50% of
Steelcase's shares of Common Stock to a strategic partner approved by the
Company. The Company executives have also agreed that they will not transfer any
shares of Common Stock in market transactions until following the public
announcement of the Company's earnings for the second quarter of its 1999 fiscal
year. Unless otherwise terminated pursuant to its terms and conditions, the
Amended Voting Agreement will remain in effect until the earlier of (a) such
time as Steelcase and any affiliates of Steelcase own less than 5 percent or
more than 50 percent of the outstanding shares of Common Stock or (b) March 19,
2003.
While the Reporting Persons reserve the right to develop plans or proposals
in the future with respect to the following items, at the present time the
Reporting Persons have no plans or proposals that relate to or would result in
any of the following:
(a) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its subsidiaries;
(b) Sale or transfer of a material amount of assets of the Company or
any of its subsidiaries;
3
<PAGE>
(c) Any material change in the present capitalization or dividend
policy of the Company;
(d) Any other material change in the Company's business or corporate
structure;
(e) Changes in the Company's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Company by any person;
(f) Causing a class of securities of the Company to be delisted from a
national securities exchange or cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(g) A class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended; or
(h) Any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer
As of the date of this filing, the Reporting Persons beneficially own
1,714,594 shares of Common Stock, which includes 131,869 shares which the
Reporting Persons have the right to purchase (the "Option Shares"), 91,033
shares of which the Reporting Persons are indirect beneficial owners, 951,445
shares owned by Steelcase as of March 26, 1999 (the "Steelcase Shares") and
260,000 shares which Steelcase has the right to acquire pursuant to a warrant
from the Company dated March 19, 1998 (the "Warrant Shares"). These shares
represent 37.7% of the shares outstanding (3,686,900) as contained in the
Company's most recent filing with the Commission, and adjusted to reflect the
444,445 shares purchased by Steelcase, the Warrant Shares and the Option Shares.
Pursuant to the Voting Agreement, the Reporting Persons share voting power
over 1,322,725 shares of Common Stock. The Reporting Persons disclaim any voting
power over the Warrant Shares. Subject to the Voting Agreement, the Reporting
Persons have sole dispositive power over the shares they directly own. The
Reporting Persons disclaim any dispositive power over the Steelcase Shares and
Warrant Shares.
4
<PAGE>
The identity and background of the Reporting Persons are as follows:
Name: William P. Cargile
Business Address: 7216 SW Durham Road, Portland, Oregon 97224
Present Principal Employment: Director, Microfield Graphics, Inc.
Principal Business and
Address of Principal Employer: Manufacture of computer conferencing and
telecommunications products 7216 SW Durham
Road, Portland, Oregon 97224
Citizenship: United States of America
Number of shares with:
o sole power to vote 0
o shared power to vote: 1,322,725
o sole power to dispose: 190,000
o shared power to dispose: 0
Name: John B. Conroy
Business Address: 7216 SW Durham Road, Portland, Oregon 97224
Present Principal Employment: President, Chief Executive
Officer, Chairman and Director
Microfield Graphics, Inc.
Principal Business and
Address of Principal Employer: Manufacture of computer conferencing and
telecommunications products 7216 SW Durham
Road, Portland, Oregon 97224
Citizenship: United States of America
Number of shares with:
o sole power to vote: 0
o shared power to vote: 1,322,725
o sole power to dispose: 45,000
o shared power to dispose: 91,033
Name: Randall R. Reed
Business Address: 7216 SW Durham Road, Portland, Oregon 97224
Present Principal Employment: Chief Financial Officer,
Microfield Graphics, Inc.
Principal Business and
Address of Principal Employer: Manufacture of computer conferencing and
telecommunications products 7216 SW Durham
Road, Portland, Oregon 97224
Citizenship: United States of America
5
<PAGE>
Number of shares with:
o sole power to vote: 0
o shared power to vote: 1,322,725
o sole power to dispose: 5,001
o shared power to dispose: 0
Name: Herbert S. Shaw
Business Address: 7216 SW Durham Road, Portland, Oregon 97224
Present Principal Employment: Director, Microfield Graphics, Inc.
Principal Business and
Address of Principal Employer: Manufacture of computer conferencing and
telecommunications products 7216 SW Durham
Road, Portland, Oregon 97224
Citizenship: United States of America
Number of shares with:
o sole power to vote: 0
o shared power to vote: 1,322,725
o sole power to dispose: 0
o shared power to dispose: 0
Name: Michael W. Stansell
Business Address: 7216 SW Durham Road, Portland, Oregon 97224
Present Principal Employment: Vice President of Operations,
Microfield Graphics, Inc.
Principal Business and
Address of Principal Employer: Manufacture of computer conferencing and
telecommunications products 7216 SW Durham
Road, Portland, Oregon 97224
Citizenship: United States of America
Number of shares with:
o sole power to vote: 0
o shared power to vote: 1,322,725
o sole power to dispose: 22,603
o shared power to dispose: 0
6
<PAGE>
Name: Ross K. Summers
Business Address: 7216 SW Durham Road, Portland, Oregon 97224
Present Principal Employment: Vice President, Sales and Marketing,
Microfield Graphics, Inc.
Principal Business and
Address of Principal Employer: Manufacture of computer conferencing and
telecommunications products 7216 SW Durham
Road, Portland, Oregon 97224
Citizenship: United States of America
Number of shares with:
o sole power to vote: 0
o shared power to vote: 1,322,725
o sole power to dispose: 0
o shared power to dispose: 0
Name: Donald H. Zurstadt
Business Address: 7216 SW Durham Road, Portland, Oregon 97224
Present Principal Employment: Vice President of Engineering,
Microfield Graphics, Inc.
Principal Business and
Address of Principal Employer: Manufacture of computer conferencing and
telecommunications products 7216 SW Durham
Road, Portland, Oregon 97224
Citizenship: United States of America
Number of shares with:
o sole power to vote: 0
o shared power to vote: 1,322,725
o sole power to dispose: 17,643
o shared power to dispose: 0
None of the Reporting Persons has, during the past five years, been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) nor has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Steelcase is a Michigan corporation. The principal business of Steelcase is
the manufacture of office furniture and related products. The principal business
and other address of Steelcase is 901 44th Street, Grand Rapids, Michigan 49508.
Steelcase has the sole power
7
<PAGE>
to vote 0 shares, the shared power to vote 1,322,725 shares, sole power to
dispose of 951,445 shares and shared power to dispose of 0 shares.
Based on information provided to the Reporting Persons, Steelcase has not
been convicted in a criminal proceeding in the last five years (excluding
traffic violations or similar misdemeanors). Steelcase has not been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
nor as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
No other transactions involving Common Stock were effected by the Reporting
Persons within the sixty days prior to the date of this Amendment No. 2 to
Schedule 13D.
No other person is known to have the right to receive, or the power to
direct the receipt of, dividends from, or the proceeds from the sale of, the
Common Stock owned by the Reporting Persons.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer
A description of the Voting Agreement is included under Item 4 above.
Item 7. Material to be Filed as Exhibits
Amended and Restated Share Ownership, Voting and Right of First Refusal
Agreement among the Reporting Persons, the Company and Steelcase dated as of
March 25, 1999.
8
<PAGE>
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
May 25, 1999
-----------------------------------------
Date
RANDALL R. REED
-----------------------------------------
Randall R. Reed, as representative of the
Reporting Persons
9
Exhibit 99.(A)
AMENDED AND RESTATED
SHARE OWNERSHIP, VOTING
AND RIGHT OF FIRST REFUSAL AGREEMENT
This AMENDED AND RESTATED SHARE OWNERSHIP, VOTING AND RIGHT OF FIRST
REFUSAL AGREEMENT (the "Agreement") is entered into as of March 25, 1999 by and
between Microfield Graphics, Inc., an Oregon corporation (the "Company"), and
Steelcase Inc., a Michigan corporation ("Steelcase") and the executive officers
and directors of the Company listed in Schedule A (the "Executives").
RECITALS
A. The parties hereto (other than Herbert S. Shaw and Ross K. Summers) are
parties to that certain Share Ownership, Voting and Right of First Refusal
Agreement dated as of March 19, 1998 (the "Original Agreement").
B. Steelcase proposes to acquire, pursuant to a Common Stock Purchase
Agreement dated as of March 25, 1999, 444,445 shares of the Company's Common
Stock (the "Additional Shares").
C. Steelcase, the Company and the Executives wish to amend and restate the
Original Agreement in its entirety to reflect the acquisition of the Additional
Shares, to add Herbert S. Shaw and Ross K. Summers as parties, to acknowledge
that Scott McVay and Peter Zinsli are not parties to this Agreement and to
incorporate certain other changes contained herein.
AGREEMENT
For good and valuable consideration including the promises contained
herein, the parties agree as follows:
1. Definitions. The following terms and phrases used in this Agreement
shall have the meanings given in this Section 1:
"Additional Shares" shall have the meaning set forth in the recitals
of this Agreement.
"Affiliate," in the case of Steelcase, means any other person or
entity, directly or indirectly, controlled by or under direct or indirect common
control with Steelcase; and in the case of any Executive, means any member of
the Executive's immediate family or a trust for the benefit of such family
member. For the purposes of this definition, "control" means
<PAGE>
the power to direct the management and policies of such person or entity,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise. Affiliates shall not mean employees of Steelcase acting
in their individual capacities.
"Beneficial owner" of Shares means a person who has or shares with
respect to such shares (1) voting power, which includes the power to vote, or to
direct the voting of, such Shares or (2) investment power, which includes the
power to dispose, or to direct the disposition of, such Shares. "Beneficial
ownership" shall be determined in accordance with the foregoing definition.
Notwithstanding the foregoing, no Executive shall be deemed to be the beneficial
owner of Shares where his power to vote or direct the voting is solely as a
result of his appointment as proxy by another shareholder that is not an
Affiliate of the Executive.
"Business day" shall have the meaning given in Rule 14d-l(c) under the
Exchange Act.
"Closing" means the closing of the purchase by Steelcase pursuant to
the Stock Purchase Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executives" shall have the meaning given in the preamble of this
Agreement.
"Executive's Shares" means all Shares beneficially owned by each
Executive, including Shares acquired after the date of this Agreement.
"Group" shall have the meaning given in Rule 13d-5(b) under the
Exchange Act.
"Independent Director" for purposes of this Agreement shall mean any
director who is not also employed by the Company. Initially, the Independent
Directors shall be the Independent Directors listed on Schedule 3.3.
"Lien" shall have the meaning given in Section 2 of this Agreement.
"Proposed Transferee" shall have the meaning given in Section 6 of this
Agreement.
"Second Closing" means the closing of the purchase by Steelcase
pursuant to the Second Stock Purchase Agreement.
"Second Stock Purchase Agreement" shall mean that Common Stock
Purchase Agreement dated March 25, 1999 between the Company and Steelcase
pursuant to which Steelcase shall acquire the Additional Shares.
"Securities Act" shall mean the Securities Act of 1933, as amended.
2
<PAGE>
"Shares" shall mean issued and outstanding shares of Common Stock of
the Company and any other class or series of capital stock that at any time
gives the holder the right to vote for the election of directors.
"Steelcase Shares" means all Shares beneficially owned by Steelcase,
including Shares acquired after the date of this Agreement.
"Stock Purchase Agreement" shall mean that Common Stock Purchase
Agreement dated March 16, 1998 between the Company and Steelcase.
"Strategic Partner" shall mean any other person or entity that is not
an Affiliate of Steelcase with whom Steelcase intends to enter into a business
transaction relating to Steelcase's investment in the Company. The selection of
a Strategic Partner requires the prior written approval of the Company, which
the Company may not unreasonably withhold.
"The Company" shall have the meaning given in the preamble of this
Agreement.
"Threshold Amount" shall have the meaning given in Section 3 of this
Agreement.
"Transfer" shall mean any sale, contract to sell, exchange,
assignment, gift or other disposition (other than a pledge or encumbrance to
secure a loan), whether voluntary or involuntary, because of any act or
occurrence.
2. Representations.
2.1 Steelcase. Steelcase represents and warrants that as of the date
of this Agreement (a) it beneficially owns all the Shares purchased under the
Stock Purchase Agreement and the Second Stock Purchase Agreement; (b) except as
permitted by this Agreement, the Stock Purchase Agreement or the Second Stock
Purchase Agreement, the Steelcase Shares are not subject to any lien, charge,
pledge, security interest, adverse claim, obligation to sell or otherwise
dispose or other encumbrance of any kind or nature whatsoever and however
arising ("Lien"); and (c) neither the execution and delivery of this Agreement
nor the observance or performance of its terms by Steelcase violates, or creates
any Lien with respect to the Steelcase Shares, pursuant to any statute,
ordinance, regulation, order, judgment or decree applicable to Steelcase or the
Steelcase Shares or any agreements to which Steelcase or the Steelcase Shares
are bound.
2.2 Executives. Each Executive represents and warrants that as of the
date of this Agreement (a) except as permitted by this Agreement, the Stock
Purchase Agreement or the Second Stock Purchase Agreement, the Executive's
Shares are not subject to any Lien (as defined above); and (b) neither the
execution and delivery of this Agreement nor the
3
<PAGE>
observance or performance of its terms by the Executive violates, or creates any
Lien with respect to the Executive's Shares, pursuant to any statute, ordinance,
regulation, order, judgment or decree applicable to the Executive or the
Executive's Shares or any agreements to which the Executive or the Executive's
Shares are bound.
3. Voting of Shares Generally.
3.1 Steelcase Shares Below Threshold Amount. Any Shares beneficially
owned by Steelcase up to and including 1,054,445 Shares (as adjusted for any
stock split, combination or stock dividend) (the "Threshold Amount") may be
voted by Steelcase in its discretion without restriction except as set forth in
Section 3.3.
3.2 Steelcase Shares Above Threshold Amount. With respect to all
matters submitted to shareholders of the Company for a vote (other than
elections of directors), all Shares beneficially owned by Steelcase in excess of
the Threshold Amount shall be voted in proportion to the votes of all
outstanding Shares actually cast including Shares up to and including the
Threshold Amount, but not including abstentions or Shares beneficially owned by
Steelcase in excess of the Threshold Amount.
3.3 Director Elections. Steelcase and each Executive shall vote all of
its or his Shares, including Shares in excess of the Threshold Amount, to elect
the directornominees listed in Schedule 3.3 (or their respective successors
selected in the manner described in Schedule 3.3); provided, however, that any
party may vote its or his Shares against any such director-nominee if grounds
exist to terminate the director-nominee "for cause" and such party provides a
notification to the Company of the grounds for such conclusion. If any
director-nominee listed in Schedule 3.3 is not elected as a result of the
proviso in the preceding sentence, his successor shall be selected in the manner
described in Schedule 3.3.
3.4 Affiliates and Strategic Partners. Each party agrees that the
voting provisions set forth in this Agreement shall apply to Shares transferred
by such party to its or his Affiliates or to a Strategic Partner and that prior
to any such transfer such Affiliates or Strategic Partner shall have agreed in
writing to be bound by the provisions of this Section 3.
4. Restrictions on Transfer.
4.1 Executives. Each Executive shall not transfer any of his Shares in
a private sale (excluding market transactions), except in accordance with
Section 6 of this Agreement. In addition, each Executive has not transferred
since March 16, 1999 through the date of this Agreement and shall not transfer
any of his Shares, including Shares acquired by the exercise of stock options,
in a market transaction until after the Company publicly announces its earnings
for the second quarter of fiscal year 1999 (the "Earnings Announcement"). Each
Executive agrees that in the event that he has transferred since March 16, 1999
or does transfer any of his Shares in a market transaction prior to the Earnings
4
<PAGE>
Announcement, he shall immediately pay to the Company the amount of any gain he
realized on such transfer to the extent that the purchase price paid for his
Shares in such transaction exceeded $2.25 per share.
4.2 Steelcase. Steelcase shall not transfer any Shares until the
second anniversary of the Closing, other than (a) to a Steelcase Affiliate or
(b) up to 50% of the Steelcase Shares (as determined immediately prior to the
first transfer of Shares by Steelcase to any transferee) to any one Strategic
Partner. Notwithstanding the foregoing, the obligations set forth in this
Agreement shall continue to be applicable to (y) any Steelcase Affiliate or
Strategic Partner who is a transferee of Steelcase's Shares, and (z) any
transferee after the second anniversary of the Closing if such transferee
obtained the Shares from Steelcase in a private sale (excluding market
transactions) and, in each case, the transferee shall have agreed in writing to
be bound by the provisions of this Agreement affecting the transferred Shares.
5. Acquisition of New Shares. Each party agrees that any Shares acquired by
such party, whether by purchase or otherwise, shall be subject to the terms of
this Agreement.
6. Right of First Refusal.
6.1 Proposed Transfers. If any Executive proposes to sell any of such
Executive's Shares to any person or group (a "Proposed Transferee") in one or a
series of related transactions in a private sale (excluding market
transactions), no such sale shall be completed unless the Executive first gives
Steelcase a written notice of such proposed sale. Upon receipt of such notice,
Steelcase shall have the right to purchase all the Executive's Shares offered to
the Proposed Transferee upon substantially the same terms and conditions offered
to the Proposed Transferee. Steelcase must respond to such notice with an offer
to buy the Executive's Shares within ten business days after receipt of the
notice, after which time the Executive may sell to the Proposed Transferee on
the specified terms. If the Executive has not consummated the sale to the
Proposed Transferee within 90 days after the date of giving the required notice
to Steelcase, the proposed sale shall again be subject to this Section 6.1 and
another notice to Steelcase is required.
6.2 Transfers Not Subject to Rights of First Refusal. This Section 6
shall not apply to any transfer (a) by an Executive to any Affiliate provided,
however, that with respect to a transfer of any Shares permitted pursuant to
this clause, the obligations set forth in this Agreement shall continue to be
applicable to the transferee of such Shares and provided further that the
transferee of such Shares shall have agreed in writing to be bound by the
provisions of this Agreement affecting the transferred Shares; or (b) pursuant
to a business combination that is approved by the Company's Board of Directors
including a majority of the Independent Directors.
5
<PAGE>
7. Right of First Offer. If the Company proposes to sell, for cash, any
Shares to any person or group (including in a public offering), the Company
shall first make an offering of such Shares to Steelcase in accordance with the
following provisions:
7.1 Notice. The Company shall deliver a notice by confirmed facsimile
transmission, certified mail, or a nationally recognized overnight courier
service ("Notice") to Steelcase stating (a) the Company's bona fide intention to
offer such Shares, (b) the number of such Shares to be offered (including any
Shares to be offered for the account of any shareholder), and (c) the price and
a summary of the terms, if any, upon which the Company proposes to offer such
Shares.
7.2 Election to Purchase. By written notification received by the
Company within 20 calendar days after receipt of the Notice, Steelcase may elect
to purchase or obtain, at the price and on the terms specified in the Notice
all, but not less than all, of the Shares specified in the Notice.
7.3 If Steelcase declines to purchase such Shares, the Company may,
during the 270 day period following the expiration of the election period, offer
the Shares to any person or persons (including in a public offering) at a price
not less than, and upon terms no more favorable to the offeree than those
specified in the Notice. If the Company does not sell the Shares within such
period, the right provided hereunder shall be deemed to be revived, and such
Shares shall not be offered unless first reoffered to Steelcase in accordance
with this Section.
7.4 The right of first offer in this Section 7 shall not be applicable
to (a) Shares issuable or issued to employees, consultants or directors of the
Company directly or pursuant to a stock incentive plan or restricted stock plan
approved by the Company's Board of Directors, (b) Shares issued or issuable upon
conversion of any convertible securities, (c) securities issued or issuable to
banks or equipment lessors, provided such issuances are for other than primarily
equity financing purposes and are not for more than 5 percent of the outstanding
Shares of the Company, and (d) securities issued in connection with business
combinations approved by the Company's Board of Directors including a majority
of the Independent Directors.
8. Term and Termination. This Agreement shall become effective upon
execution and shall continue in full force and effect until the earlier of (a)
such time as Steelcase or any Steelcase Affiliate beneficially owns less than 5
percent of the outstanding Shares of the Company for a period continuing for
more than one year, (b) the fifth anniversary of the Closing, or (c) the date
upon which Steelcase and/or its Affiliates beneficially own more than 50 percent
of the outstanding Shares of the Company. Except as otherwise expressly provided
in this Agreement, the obligations and restrictions set forth in this Agreement
shall not apply to any person who acquires beneficial ownership of Shares
pursuant to a transfer permitted by this Agreement. The obligations and
restrictions set forth in this Agreement shall cease to
6
<PAGE>
apply to any Executive after such Executive ceases to be a director or executive
officer of the Company. The Company shall give Steelcase notice within a
reasonable period after any Executive ceases to be a director or officer of the
Company.
9. Specific Performance. The parties to this Agreement acknowledge and
agree that it is impossible to measure in money the damages that will accrue to
a party or to their successors, heirs, personal representatives or assigns by
reason of a failure to perform any of the obligations under this Agreement and
agree that the terms of this Agreement shall be specifically enforceable, and
appropriate injunctive relief may be applied for and granted in connection with
the enforcement of this Agreement. If any party to this Agreement or his or its
successors, heirs, personal representatives or assigns institutes any action or
proceeding to enforce specifically any provision of this Agreement, any person
against whom such action of proceeding is brought waives the claim or defense
that such party has an adequate remedy at law, and such person shall not offer
in any such action or proceeding the claim or defense that such remedy at law
exists. Such equitable remedies shall, however, be cumulative and not exclusive
and shall be in addition to any other remedies that any party may have under
this Agreement or otherwise.
10. Further Assurances. Each party to this Agreement shall do and perform
or cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments or
documents as any other party may reasonably request from time to time in order
to carry out the intent and purposes of this Agreement. No party to this
Agreement shall voluntarily undertake any course of action inconsistent with
satisfaction of the requirements applicable to them set forth in such
instruments and documents, and each party shall promptly do all such acts and
take all such measures as may be appropriate to enable him or it to perform as
early as practicable the obligations herein and therein required to be performed
by them.
11. Governing Law. This Agreement, and the rights of the parties hereto,
shall be governed by and construed in accordance with the laws of the state of
Oregon, exclusive of choice of law rules.
12. Amendment. This Agreement, other than Sections 6 and 7, may be amended,
or its terms waived, only by an instrument in writing signed by Steelcase, the
Executives and the Company. The provisions of Section 6 may be amended, or its
terms waived, only by an instrument in writing signed by Steelcase and the
Executive selling Shares. The provisions of Section 7 may be amended, or its
terms waived, only by an instrument in writing signed by Steelcase and the
Company.
13. Severability. If any provision of this Agreement is held to be invalid
or unenforceable, the validity and enforceability of the remaining provisions of
this Agreement shall not be affected thereby.
7
<PAGE>
14. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, successors,
assigns, administrators, executors, and other legal representatives.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together
shall constitute one and the same agreement.
16. No Third Party Beneficiaries. This Agreement is entered into solely for
the benefit of the parties hereto and nothing in this Agreement shall confer
rights or benefits on any third party.
17. Removal of Parties. This Agreement hereby acknowledges that Scott McVay
and Peter Zinsli, who are parties to the Original Agreement, are no longer
executive officers of the Company and therefore are not parties to this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
MICROFIELD GRAPHICS, INC.
JOHN B. CONROY
-----------------------------------------
John B. Conroy
President and Chief Executive Officer
STEELCASE INC.
JAMES P. HACKETT
-----------------------------------------
James P. Hackett
President and Chief Executive Officer
EXECUTIVES:
JOHN B. CONROY
-----------------------------------------
John B. Conroy
8
<PAGE>
ROSS K. SUMMERS
-----------------------------------------
Ross K. Summers
RANDALL R. REED
-----------------------------------------
Randall R. Reed
MICHAEL W. STANSELL
-----------------------------------------
Michael W. Stansell
DONALD H. ZURSTADT
-----------------------------------------
Donald H. Zurstadt
WILLIAM P. CARGILE
-----------------------------------------
William P. Cargile
HERBERT S. SHAW
-----------------------------------------
Herbert S. Shaw
9
<PAGE>
SCHEDULE A
Executives
John B. Conroy
Ross K. Summers
Randall R. Reed
Michael W. Stansell
Donald H. Zurstadt
William P. Cargile
Herbert S. Shaw
10
<PAGE>
SCHEDULE 3.3
Director-Nominees
John B. Conroy (or the successor Chief Executive Officer of the Company)
William P. Cargile (or his successor selected as described below)
Herbert S. Shaw (or his successor selected as described below)
James P. Keane (or a successor designated in writing by Steelcase)
One other director-nominee acceptable to the majority of the directors then in
office.
If Mr. Cargile or Mr. Shaw are no longer serving as directors, the
parties shall vote for an independent, outside director-nominee
acceptable to the majority of the directors then in office as a
successor.
Messrs. Cargile, Keane and Shaw shall be considered the initial "Independent
Directors" for purposes of the Amended and Restated Share Ownership, Voting and
Right of First Refusal Agreement.
11
