-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Km7WWqOqGrz6MSzpWc+V8+5CCq0Q1qqx3HnVra/hOgJHqZlqOyWuHLxq3I14lRfP ts207+tl8KnfrkY5d4QcNA== 0000893877-99-000374.txt : 19990624 0000893877-99-000374.hdr.sgml : 19990624 ACCESSION NUMBER: 0000893877-99-000374 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19990525 GROUP MEMBERS: DONALD ZURSTADT GROUP MEMBERS: HERBERT S. SHAW GROUP MEMBERS: JOHN B. CONROY GROUP MEMBERS: MICHAEL STANSELL GROUP MEMBERS: RANDALL R. REED GROUP MEMBERS: REED RANDALL R GROUP MEMBERS: ROSS K. SUMMERS GROUP MEMBERS: WILLIAM P. CARGILE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MICROFIELD GRAPHICS INC /OR CENTRAL INDEX KEY: 0000944947 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 930935149 STATE OF INCORPORATION: OR FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-49773 FILM NUMBER: 99634325 BUSINESS ADDRESS: STREET 1: 9216 SW DURHAM RD CITY: PORTLAND STATE: OR ZIP: 97224 BUSINESS PHONE: 5036204000 MAIL ADDRESS: STREET 1: MICRFIELD GRAPHICS INC /OR STREET 2: 9216 SW DURHAM RD CITY: PORTLAND STATE: OR ZIP: 97224 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: REED RANDALL R CENTRAL INDEX KEY: 0001058638 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 7216 SW DURHAM RD CITY: PORTLAND STATE: OR ZIP: 97224 BUSINESS PHONE: 5036204000 MAIL ADDRESS: STREET 1: 7216 SW DURHAM RD CITY: PORTLAND STATE: OR ZIP: 97224 SC 13D/A 1 SCHEDULE 13D, AMENDMENT NO. 2 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). 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. - -------------------------------------------------------------------------------- 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 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 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 (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 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 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 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 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 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 EX-99.(A) 2 AMENDED AND RESTATED SHARE OWNERSHIP AGREEMENT 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 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 "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 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 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 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 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 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 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 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 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 -----END PRIVACY-ENHANCED MESSAGE-----