<PAGE>
----------------------------
OMB APPROVAL
----------------------------
OMB Number: 3235-0145
Expires: August 31, 1999
Estimated average burden
hours per response 14.90
----------------------------
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)
Jon D. Botsford, Steelcase Inc., 901-44th Street S.E.,
Grand Rapids, MI 49508, (616) 246-9600
- -------------------------------------------------------------------------------
(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 that is the subject of this Schedule 13D, and is filing this
Schedule because of (S)(S)240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. [ ]
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See (S)240.13d-7 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 in 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).
Potential persons who are to respond to the collection of information contained
in this form are not required to respond unless the form displays a currently
valid OMB control number.
Page 1 of 8 pages
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- -------------------------------------------------------------------------------
1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only)................
- -------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a).....................................................................[ ]
(b).....................................................................[ ]
- --------------------------------------------------------------------------------
3. SEC Use Only.............................................................
- --------------------------------------------------------------------------------
4. Source of Funds (See Instructions).......................................
- -------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d)
or 2(e)..................................................................[ ]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization........................................
- --------------------------------------------------------------------------------
7. Sole Voting Power........................................0
Number of --------------------------------------------------------------
Shares Bene-
ficially 8. Shared Voting Power..............................1,322,725
Owned By Each
Reporting ---------------------------------------------------------------
Person With:
9. Sole Dispositive Power..............................951,445
--------------------------------------------------------------
10. Shared Dispositive Power..................................0
- ---------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person 1,697,491
- ---------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) [ ]
- ---------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)....................37.7%
- ---------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)...............................
- ---------------------------------------------------------------------------------
</TABLE>
Page 2 of 8 pages
<PAGE>
This Amendment No. 2 is being filed to amend the Schedule 13D filed by
Steelcase Inc. on March 30, 1998, as amended on September 10, 1998. All
references herein to the "Original 13D Filing" refer to the Schedule 13D filed
on March 30, 1998.
Item 1. Security and Issuer.
The title of the class of equity securities to which this statement relates
is Common Stock ("Common Stock"), of Microfield Graphics, Inc., an Oregon
corporation (the "Company"). The address of the Company's principal executive
offices is 7216 SW Durham Road, Portland, Oregon 97224.
Item 2. Identity and Background.
This statement is being filed by Steelcase Inc. ("Steelcase"), a Michigan
corporation. The principal business of Steelcase is the manufacture of office
furniture and related products. The principal business and office address of
Steelcase is 901-44th Street S.E., Grand Rapids, Michigan 49508.
Steelcase has not, during the last five years, been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors). Steelcase
has not, during the last five years, 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.
Item 3. Source and Amount of Funds or Other Consideration.
This statement is being filed to report that, on March 26, 1999, Steelcase
purchased 444,445 shares of Common Stock for an aggregate purchase price of
$1,000,001.25. The source of the funds used in making the purchases was the
working capital of Steelcase.
Item 4. Purpose of Transaction.
Steelcase acquired the additional shares of Common Stock pursuant to a
Common Stock Purchase Agreement between the Company and Steelcase, dated March
25, 1999 (the "Purchase Agreement"), in order to (a) increase its investment in
the Company, (b) facilitate the joint development of products by the Company and
Steelcase and (c) provide the Company with working capital. The Purchase
Agreement is attached hereto as Exhibit 1 and is incorporated herein by
reference.
Pursuant to the Purchase Agreement, the Company, Steelcase and certain
executive officers and directors of the Company (the "Company Executives")
entered into an Amended and Restated Share Ownership, Voting and Right of First
Refusal Agreement (the "Amended Voting Agreement") on March 25, 1999. The
Amended Voting Agreement is attached hereto as Exhibit 2 and incorporated herein
by reference. Pursuant to the Amended Voting Agreement,
Page 3 of 8 pages
<PAGE>
Steelcase and the Company Executives 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 outstanding shares
of Common Stock. Also, pursuant to the Amended Voting Agreement, Steelcase has a
right of first refusal for certain proposed sales of shares of Common Stock by
the Company Executives 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.
Pursuant to the Purchase Agreement, the Company and Steelcase also entered
into Amendment No. 1 (the "Amendment") dated March 25, 1999, to the Registration
Rights Agreement between Steelcase and the Company dated March 19, 1998 (the
"Registration Rights Agreement"). The Amendment is attached hereto as Exhibit 3
and is incorporated herein by reference. The Registration Rights Agreement was
attached as Exhibit 4 to the original 13D Filing and is also incorporated herein
by reference. The Registration Rights Agreement, as amended by the Amendment,
provides that upon request by Steelcase, at any time after March 19, 2000, the
Company will effect, subject to certain limitations, the registration under the
Securities Act of 1933, as amended, of the 951,445 shares of Common Stock
currently owned by Steelcase and any shares acquired by Steelcase by exercise of
a warrant (the "Warrant") for the purchase of 260,000 shares of Common Stock
acquired by Steelcase from the Company on March 19, 1998.
Steelcase may acquire additional shares of Common Stock (a) by the exercise
of the Warrant or (b) from time to time for investment purposes if market
conditions are favorable.
Other than as described above (including, without limitation, in connection
with the Purchase Agreement, the Amended Voting Agreement, the Registration
Rights Agreement, as amended and the Warrant), Steelcase does not have any
current plans or proposals for (i) any extraordinary corporate transaction, such
as a merger, reorganization or liquidation, involving the Company or any of its
subsidiaries, (ii) any sale or transfer of a material amount of assets of the
Company or any of its subsidiaries, (iii) any change in the present board of
directors or management of the Company, including any plans or proposals to
change the number or term of directors or to fill any existing vacancies on the
Board, (iv) any material change in the Company's present capitalization or
dividend policy, (v) any other material change in the
Page 4 of 8 pages
<PAGE>
Company's business or corporate structure, (vi) any changes in the Company's
Articles of Incorporation or Bylaws or other actions which may impede the
acquisition of control of the Company by any person, (vii) causing a class of
securities of the Company to be delisted from a national securities exchange or
to cease to be authorized to be quoted in an inter-dealer quotation system of a
registered national securities association, (viii) a class of the Company's
equity securities becoming eligible for termination of registration pursuant to
Section 12(g)(4) of the Securities Exchange Act of 1934, as amended, or (ix) any
action similar to those enumerated above.
Item 5. Interest in Securities of the Issuer.
The number of shares of Common Stock beneficially owned by Steelcase is
1,697,491, which includes 951,445 shares owned by Steelcase as of March 26,
1999, 260,000 shares which Steelcase has the right to acquire pursuant to the
Warrant (the "Warrant Shares"), 371,280 shares owned by the Company Executives
and 114,766 shares subject to issuance pursuant to options held by the Company
Executives which are exercisable within 60 days (the "Option Shares"). The
shares beneficially owned by Steelcase represent 37.7% of the Common Stock
outstanding, based on the Company's representations to Steelcase in the Purchase
Agreement that 3,686,900 shares of Common Stock were outstanding as of February
28, 1999, adjusted to reflect the Warrant Shares and the Option Shares and the
shares issued to Steelcase on March 26, 1999.
Pursuant to the Amended Voting Agreement, Steelcase has shared voting power
over 1,322,725 shares of Common Stock. Steelcase disclaims any voting power
over the Warrant Shares and the Option Shares. Subject to the Voting Agreement,
Steelcase has sole dispositive power over the shares it directly owns.
Steelcase disclaims any dispositive power over the Warrant Shares, the Option
Shares and the shares presently held by the Company Executives.
The identity and background of the Company Executives 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
United States of America
Citizenship:
Number of shares with:
. sole power to vote 0
. shared power to vote: 1,322,725
. sole power to dispose: 190,000
. shared power to dispose: 0
Page 5 of 8 pages
<PAGE>
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
United States of America
Citizenship:
Number of shares with:
. sole power to vote: 0
. shared power to vote: 1,322,725
. sole power to dispose: 45,000
. 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
United States of America
Citizenship:
Number of shares with:
. sole power to vote: 0
. shared power to vote: 1,322,725
. sole power to dispose: 5,001
. 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
United States of America
Citizenship:
Number of shares with:
. sole power to vote: 0
. shared power to vote: 1,322,725
. sole power to dispose: 0
. shared power to dispose: 0
Page 6 of 8 pages
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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:
. sole power to vote: 0
. shared power to vote: 1,322,725
. sole power to dispose: 22,603
. shared power to dispose: 0
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:
. sole power to vote: 0
. shared power to vote: 1,322,725
. sole power to dispose: 0
. 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:
. sole power to vote: 0
. shared power to vote: 1,322,725
. sole power to dispose: 17,643
. shared power to dispose: 0
</TABLE>
Based on information provided to Steelcase, Steelcase believes that none
of the Company Executives has, during the past five years, been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) and
that none of the Company Executives has, during
Page 7 of 8 pages
<PAGE>
the last five years, 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.
No other transactions involving Common Stock were effected by Steelcase
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 Steelcase.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Descriptions of the Purchase Agreement, the Amended Voting Agreement,
the Registration Rights Agreement and the Amendment are included under Item 4
above. The Warrant was acquired pursuant to the Common Stock Purchase Agreement
between the Company and Steelcase, dated March 16, 1998, and the March 16, 1998
Common Stock Purchase Agreement and the Warrant were described in Items 3 and 4
of the Original 13D Filing and attached to the Original 13D Filing as Exhibits 1
and 2, respectively.
Item 7. Material to be Filed as Exhibits.
1. Common Stock Purchase Agreement between Microfield Graphics, Inc., and
Steelcase Inc., dated March 25, 1999.
2. Amended Share Ownership, Voting and Right of First Refusal Agreement,
between Microfield Graphics, Inc., Steelcase Inc. and John B. Conroy,
Ross K. Summers, Randall R. Reed, Michael W. Stansell, Donald H.
Zurstadt, William P. Cargile and Herbert S. Shaw, dated March 25,
1999.
3. Amendment No. 1 to Registration Rights Agreement, between Microfield
Graphics, Inc., and Steelcase Inc., dated March 25, 1999.
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.
Dated: April 14, 1999 STEELCASE INC.
By: /s/ Sheila C. Dayton
------------------------
Sheila C. Dayton
Assistant General Counsel
and Assistant Secretary
Page 8 of 8 pages
<PAGE>
Exhibit 1
---------
COMMON STOCK PURCHASE AGREEMENT
between
MICROFIELD GRAPHICS, INC.
and
STEELCASE INC.
March 25, 1999
<PAGE>
TABLE OF CONTENTS
Page
1. Purchase and Sale of Stock................................ 1
1.1 Sale and Issuance of Common Stock.................... 1
1.2 Closing.............................................. 1
1.3 Further Covenants; Price Limitation on Future Sales.. 1
2. Other Agreements.......................................... 1
2.1 Amended Voting Agreement............................. 1
2.2 Amended Registration Rights Agreement................ 1
3. Representations and Warranties of the Company............. 1
3.1 Organization, Good Standing and Qualification........ 2
3.2 Authorization........................................ 2
3.3 Capitalization....................................... 2
3.4 Valid Issuance of Common Stock....................... 2
3.5 Absence of Conflicting Agreements; Consents.......... 2
3.6 Governmental Consents................................ 3
3.7 SEC and Other Reports................................ 3
3.8 Litigation........................................... 3
3.9 No Finders........................................... 3
3.10 Use of Proceeds ..................................... 3
4. Representations and Warranties of Investor................ 4
4.1 Organization, Good Standing and Qualification........ 4
4.2 Authorization........................................ 4
4.3 Absence of Conflicting Agreements; Consents.......... 4
4.4 Litigation........................................... 4
4.5 Purchase Entirely for Own Account.................... 4
4.6 Disclosure of Information............................ 5
4.7 Investment Experience................................ 5
4.8 Accredited Investor.................................. 5
4.9 Restricted Securities................................ 5
4.10 Legends.............................................. 5
4.11 No Finders........................................... 6
4.12 Affiliate Status..................................... 6
5. Conditions of Investor's Obligations at Closing........... 6
5.1 Representations and Warranties....................... 6
5.2 Qualifications....................................... 6
5.3 Proceedings and Documents............................ 6
ii
<PAGE>
5.4 Amending Voting Agreement............................ 6
5.5 Amended Registration Rights Agreement................ 7
6. Conditions of the Company's Obligations at Closing........ 7
6.1 Representations and Warranties....................... 7
6.2 Qualifications....................................... 7
6.3 Proceedings and Documents............................ 7
6.4 Payment of Purchase Price............................ 7
6.5 Amended Voting Agreement............................. 7
6.6 Amended Registration Rights Agreement................ 7
7. Miscellaneous............................................. 8
7.1 Survival of Warranties............................... 8
7.2 Successors and Assigns............................... 8
7.3 Governing Law........................................ 8
7.4 Counterparts......................................... 8
7.5 Titles and Subtitles................................. 8
7.6 Notices.............................................. 8
7.7 Amendments and Waivers............................... 8
7.8 Severability......................................... 9
7.9 Entire Agreement..................................... 9
Schedule 2 Executive Officers and Directors
EXHIBIT A Amended and Restated Share Ownership, Voting and Right of First
Refusal Agreement
EXHIBIT B Amendment No. 1 to Registration Rights Agreement
iii
<PAGE>
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT is made as of March 25, 1999, by and
among Microfield Graphics, Inc. d/b/a SoftBoard, an Oregon corporation (the
"Company"), and Steelcase Inc., a Michigan corporation ("Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Sale and Issuance of Common Stock. Subject to the terms and
conditions of this Agreement, Investor agrees to purchase at the Closing, and
the Company agrees to sell and issue to Investor at the Closing, 444,445 shares
of the Company's Common Stock (the "Purchased Stock") for a purchase price of
$1,000,001.25.
1.2 Closing. The purchase and sale of the Purchased Stock shall
take place at the offices of Stoel Rives LLP, 900 SW Fifth Avenue, Suite 2300,
Portland, Oregon, at 10:00 A.M. on March 25, 1999, or at such other time and
place as the Company and Investor mutually agree upon orally or in writing
(which time and place are designated as the "Closing"). At the Closing, the
Company shall deliver to Investor a certificate representing the Purchased Stock
against payment of the purchase price therefor by wire transfer.
1.3 Further Covenants; Price Limitation on Future Sales. Subject to
the fiduciary duties of the officers and directors of the Company, for six
months following the Closing the Company shall not, without the prior approval
of Investor, sell any shares of the Company's Common Stock in a private sale to
a third party for a price per share less than 90% of the last trade price of the
Company's Common Stock on the Nasdaq SmallCap Market on the date the price per
share for such sale is determined.
2. Other Agreements.
2.1 Amended Voting Agreement. The Investor, the Company, and the
executive officers and directors named in Schedule 2 shall enter into the
Amended and Restated Share Ownership, Voting and Right of First Refusal
Agreement, in the form attached as Exhibit A (the "Amended Voting Agreement").
2.2 Amended Registration Rights Agreement. The Company agrees to
grant Investor registration rights as set forth in Amendment No.1 to the
Registration Rights Agreement attached as Exhibit B (the "Amended Registration
Rights Agreement").
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to Investor that:
<PAGE>
3.1 Organization, Good Standing and Qualification. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Oregon and has all requisite corporate power and authority
to carry on its business as now conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure to so qualify would have a material adverse effect on its business or
properties.
3.2 Authorization. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, the Amended Voting
Agreement and the Amended Registration Rights Agreement, the performance of all
obligations of the Company hereunder and thereunder, and the authorization,
issuance, sale and delivery of the Purchased Stock has been taken or will be
taken prior to the Closing, and this Agreement, the Amended Voting Agreement and
the Amended Registration Rights Agreement constitute valid and legally binding
obligations of the Company, enforceable in accordance with their respective
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, and (iii) to the extent the indemnification provisions contained in
the Amended Registration Rights Agreement may be limited by applicable federal
or state securities laws.
3.3 Capitalization. The authorized capital of the Company consists of:
(a) Common Stock. Twenty-five million (25,000,000) shares of
Common Stock, 3,686,900 of which were issued and outstanding as of February 28,
1999.
(b) Preferred Stock. Ten million (10,000,000) shares of
undesignated Preferred Stock, none of which are issued or outstanding.
3.4 Valid Issuance of Common Stock. The Purchased Stock, when
issued, sold and delivered in accordance with the terms of this Agreement for
the consideration expressed herein, will be duly and validly issued, fully paid,
and nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement, the Amended Voting Agreement and
the Amended Registration Rights Agreement and under applicable state and federal
securities laws.
3.5 Absence of Conflicting Agreements; Consents. The execution and
delivery of this Agreement, the Amended Voting Agreement and the Amended
Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby will not conflict in any material respect with
or result in a material breach of any terms or provisions of, or constitute a
material default under (a) the Articles of Incorporation or Bylaws of the
Company; (b) any note, bond, mortgage, indenture, license, lease, contract,
commitment, agreement or other instrument or obligation to which the Company is
a party or
2
<PAGE>
by which the Company or any of its properties may be bound; or (c)
any statute, order, writ, injunction, decree, rule or regulation applicable to
the Company or any of its properties. No consent, approval, authorization,
declaration or other order of, or registration or filing with, any court or
regulatory authority or any third person is required for the valid execution,
delivery and performance of this Agreement, the Amended Voting Agreement or the
Amended Registration Rights Agreement by the Company, or its consummation of the
transactions contemplated hereby or thereby, except such consents, approvals,
authorizations, declarations, registrations or filings that have already been
obtained or made, or those disclosed by Investor pursuant to this Agreement.
3.6 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement except if required, qualifications or filings
under the Securities Act and applicable Blue Sky laws, which qualifications and
filings will be obtained or made and will be effective within the period
required by law.
3.7 SEC and Other Reports. The Company has heretofore made
available to Investor complete copies of all of registration statements, reports
and proxy statements, including amendments thereto, filed by the Company with
the Securities and Exchange Commission (the "SEC") since January 1, 1998 and
prior to the date of this Agreement (collectively the "SEC Documents"). None of
the SEC documents, as of the date filed, contain any untrue statement of any
material fact or omit to state a material fact necessary to make the statements
contained in them not misleading. The Company has also furnished Investor with
a copy of its year-end earnings release for 1998, including its income statement
and balance sheet, for the fiscal year ended January 2, 1999.
3.8 Litigation. There is no action, proceeding or suit pending,
or, to the Company's knowledge, threatened, that questions the validity of this
Agreement, the Amended Voting Agreement or the Amended Registration Rights
Agreement or that would prevent or materially hinder the consummation of the
transactions contemplated hereby or thereby.
3.9 No Finders. The Company has not employed any broker, finder,
agent or investment banker, dealt with anyone purporting to act in that capacity
or agreed to pay any brokerage fee, finder's fee or commission with respect to
the transactions contemplated by this Agreement.
3.10 Use of Proceeds. The net proceeds to be received by the Company
from the sale of the Purchased Stock pursuant to this Agreement shall be used by
the Company for working capital and other general corporate purposes and not for
dividends, stock buybacks (except for repurchases from employees at the original
purchase price), or bonuses inconsistent with prior practices for a period of
one year from the date of Closing.
3
<PAGE>
4. Representations and Warranties of Investor. Investor hereby
represents and warrants that:
4.1 Organization, Good Standing and Qualification. Investor is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Michigan and has all requisite corporate power and authority to
carry on its business as now conducted. Investor is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure to so
qualify would have a material adverse effect on its business or properties.
4.2 Authorization. Investor has full corporate power and authority
to enter into this Agreement, the Amended Voting Agreement and the Amended
Registration Rights Agreement, and each such Agreement constitutes its valid and
legally binding obligation, enforceable in accordance with their respective
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, and (iii) to the extent the indemnification provisions contained in
the Amended Registration Rights Agreement may be limited by applicable federal
or state securities laws.
4.3 Absence of Conflicting Agreements; Consents. The execution and
delivery of this Agreement, the Amended Voting Agreement and the Amended
Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby will not conflict in any material respect with
or result in a material breach of any terms or provisions of, or constitute a
material default under (a) the Articles of Incorporation or Bylaws of Investor;
(b) any note, bond, mortgage, indenture, license, lease, contract, commitment,
agreement or other instrument or obligation to which Investor is a party or by
which Investor or any of its properties may be bound; or (c) any statute, order,
writ, injunction, decree, rule or regulation applicable to Investor or any of
its properties. No consent, approval, authorization, declaration or other order
of, or registration or filing with, any court or regulatory authority or any
third person is required for the valid execution, delivery and performance of
this Agreement and the Amended Voting Agreement by Investor or its consummation
of the transactions contemplated hereby or thereby, except such consents,
approvals, authorizations, declarations, registrations or filings that have
already been obtained or made, or those disclosed by the Company pursuant to
this Agreement.
4.4 Litigation. There is no action, proceeding or suit pending,
or, to Investor's knowledge, threatened, that questions the validity of this
Agreement, the Amended Voting Agreement or the Amended Registration Rights
Agreement or that would prevent or materially hinder the consummation of the
transactions contemplated hereby or thereby.
4
<PAGE>
4.5 Purchase Entirely for Own Account. This Agreement is made with
Investor in reliance upon such Investor's representation to the Company, which
by Investor's execution of this Agreement Investor hereby confirms, that the
Purchased Stock will be acquired for investment for Investor's own account, not
as a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and that Investor has no present intention of selling, granting
any participation in, or otherwise distributing the same. By executing this
Agreement, Investor further represents Investor does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Purchased Stock.
4.6 Disclosure of Information. Investor believes it has received
all the information it considers necessary or appropriate for deciding whether
to purchase the Purchased Stock. Investor further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Purchased Stock and the business,
properties and financial condition of the Company. The foregoing, however, does
not limit or modify the representations and warranties of the Company in Section
3 of this Agreement or the right of Investor to rely thereon.
4.7 Investment Experience. Investor is an investor in securities
of companies in the development stage and acknowledges that it is able to fend
for itself, can bear the economic risk of its investment, and has such knowledge
and experience in financial or business matters that it is capable of evaluating
the merits and risks of the investment in the Purchased Stock. Investor also
represents it has not been organized for the purpose of acquiring the Purchased
Stock.
4.8 Accredited Investor. Investor is an "accredited investor"
within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.
4.9 Restricted Securities. Investor understands that the Purchased
Stock it is purchasing is characterized as a "restricted security" under the
federal securities laws inasmuch as it is being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act of 1933, as amended (the "Act"), only in certain limited
circumstances. In this connection, Investor represents that it is familiar with
SEC Rule 144, as presently in effect, and understands the resale limitations
imposed thereby and by the Act.
4.10 Legends. It is understood that the certificates evidencing
the Purchased Stock may bear one or all of the following legends:
(a) "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
5
<PAGE>
AMENDED (THE "ACT"), OR ANY APPLICABLE STATE LAW, AND NO INTEREST THEREIN MAY BE
SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
(A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING THESE SECURITIES
OR (B) THE COMPANY RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER OF THESE
SECURITIES (CONCURRED IN BY LEGAL COUNSEL FOR THE COMPANY) STATING THAT SUCH
TRANSACTION IS EXEMPT FROM REGISTRATION OR THE COMPANY OTHERWISE SATISFIES
ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION."
(b) A legend stating that the Purchased Stock is subject to the
Amended Voting Agreement.
4.11 No Finders. Investor has not employed any broker, finder,
agent or investment banker, dealt with anyone purporting to act in that capacity
or agreed to pay any brokerage fee, finder's fee or commission with respect to
the transactions contemplated by this Agreement.
4.12 Affiliate Status. Investor acknowledges that it is considered
an "affiliate" of the Company under the Federal Securities Laws and as such,
resales of shares of the Company's Common Stock owned by it are subject to
certain limitations, including the SEC's Rule 144.
5. Conditions of Investor's Obligations at Closing. The obligations of
Investor under subsection 1.1 of this Agreement are subject to the fulfillment
on or before the Closing of each of the following conditions, the waiver of
which shall not be effective against Investor if it does not consent thereto:
5.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 3 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
5.2 Qualifications. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
5.3 Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Investor, and it shall have received all
6
<PAGE>
such counterpart original and certified or other copies of such documents as it
may reasonably request.
5.4 Amended Voting Agreement. The Company, the Investor and the
Company's executive officers and directors named in Schedule 2 shall have
entered into the Amended Voting Agreement.
5.5 Amended Registration Rights Agreement. The Company and the
Investor shall have entered into the Amended Registration Rights Agreement.
6. Conditions of the Company's Obligations at Closing. The obligations
of the Company to Investor under this Agreement are subject to the fulfillment
on or before the Closing of each of the following conditions by Investor:
6.1 Representations and Warranties. The representations and
warranties of Investor contained in Section 4 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the Closing.
6.2 Qualifications. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
6.3 Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Company, and it shall have received all such counterpart
original and certified or other copies of such documents as it may reasonably
request.
6.4 Payment of Purchase Price. Investor shall have delivered to
the Company at the Closing the purchase price for the Purchased Stock.
6.5 Amended Voting Agreement. The Company, the Investor and the
Company's executive officers and directors named in Schedule 2 shall have
entered into the Amended Voting Agreement.
6.6 Amended Registration Rights Agreement. The Company and the
Investor shall have entered into the Amended Registration Rights Agreement.
7. Miscellaneous.
7.1 Survival of Warranties.The warranties, representations and
covenants of the Company and Investor contained in or made pursuant to this
Agreement shall survive the
7
<PAGE>
execution and delivery of this Agreement and the Closing and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of the Investor or the Company.
7.2 Successors and Assigns. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Purchased Stock). Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
7.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Oregon, exclusive of choice of law
rules.
7.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
delivery by confirmed facsimile transmission or nationally recognized overnight
courier service or upon deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page hereof,
or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties.
7.7 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only by the written consent of the Company and Investor. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon the holder of any securities purchased under this Agreement at the time
outstanding (including securities into which such securities are convertible),
any future holder of all such securities, and the Company.
7.8 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and
8
<PAGE>
the balance of the Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
7.9 Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein.
9
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
THE COMPANY:
MICROFIELD GRAPHICS, INC.
By: /s/ John B. Conroy
---------------------------------------
John B. Conroy
President and Chief Executive Officer
Address: 7216 SW Durham Road
Portland, OR 97224
INVESTOR:
STEELCASE INC.
By: /s/ James P. Hackett
--------------------------------------
James P. Hackett
President and Chief Executive Officer
Address: 901 - 44th Street, S.E.
Grand Rapids, MI 49508
10
<PAGE>
SCHEDULE 2
Executive Officers and Directors
John B. Conroy
Ross K. Summers
Randall R. Reed
Michael W. Stansell
Donald H. Zurstadt
William P. Cargile
Herbert S. Shaw
11
<PAGE>
Exhibit 2
---------
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
3
<PAGE>
defined above); and (b) neither the execution and delivery of this Agreement nor
the 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
4
<PAGE>
March 16, 1999 or does transfer any of his Shares in a market transaction prior
to the Earnings 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.
/s/ John B. Conroy
------------------------------------------------
John B. Conroy
President and Chief Executive Officer
STEELCASE INC.
/s/ James P. Hackett
------------------------------------------------
James P. Hackett
President and Chief Executive Officer
EXECUTIVES:
/s/ John B. Conroy
------------------------------------------------
John B. Conroy
8
<PAGE>
/s/ Ross K. Summers
------------------------------------------------
Ross K. Summers
/s/ Randall R. Reed
-----------------------------------------------
Randall R. Reed
/s/ Michael W. Stansell
-----------------------------------------------
Michael W. Stansell
/s/ Donald H. Zurstadt
-----------------------------------------------
Donald H. Zurstadt
/s/ William P. Cargile
-----------------------------------------------
William P. Cargile
/s/ 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
<PAGE>
Exhibit 3
---------
AMENDMENT NO. 1 TO
REGISTRATION RIGHTS AGREEMENT
This Amendment No. 1 to Registration Rights Agreement, dated March 25,
1999, is between Microfield Graphics, Inc. (the "Company") and Steelcase Inc.
(the "Investor").
RECITALS
A. The Company and the Investor are parties to that certain Registration
Rights Agreement dated March 19, 1998 (the "Original Agreement").
B. The Company and the Investor are parties to a Common Stock Purchase
Agreement ("Second Purchase Agreement") dated March 25, 1999, pursuant to which
the Investor is purchasing shares of Common Stock from the Company.
C. The Company and the Investor wish to amend the Original Agreement to
encompass the shares of Common Stock of the Company that Investor is acquiring
pursuant to the Second Purchase Agreement.
AGREEMENT
The parties agree to amend Section 8 of the Original Agreement as
follows:
1. The subsection titled "Registrable Securities" shall be amended and restated
in its entirety as follows:
"Registrable Securities" means (a) the Common Stock issuable or
issued pursuant to the Purchase Agreement, (b) the Common Stock issuable or
issued upon exercise of the Warrant, (c) the Common Stock issuable or
issued pursuant to the Second Purchase Agreement, (d) the 157,000 shares of
Common Stock acquired by Steelcase in open market transactions prior to
March 16, 1999, and (e) any stock issued in connection with the Common
Stock described in (a), (b), (c) or (d) of this provision;
2. A new subsection titled "Second Purchase Agreement" shall be added, and
shall read in its entirety as follows:
"Second Purchase Agreement" means that certain Common Stock
Purchase Agreement between the Company and the Investor dated March 25,
1999;
1
<PAGE>
The parties have executed this Agreement as of the date first written
above.
MICROFIELD GRAPHICS, INC.
By: /s/ John B. Conroy
--------------------------------------
John B. Conroy, President and
Chief Executive Officer
STEELCASE INC.
By: /s/ James P. Hackett
--------------------------------------
James P. Hackett, President and
Chief Executive Officer
2
