Exhibit 1
COMMON STOCK PURCHASE AGREEMENT
between
MICROFIELD GRAPHICS, INC.
and
STEELCASE INC.
March 16, 1998
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; Good Faith Negotiation...................... 1
2. Other Agreements..................................................... 1
2.1 Voting Agreement............................................... 1
2.2 Registration Rights Agreement.................................. 2
3. Representations and Warranties of the Company........................ 2
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 Reservation of Warrant Shares.................................. 3
3.6 Absence of Conflicting Agreements; Consents.................... 3
3.7 Governmental Consents.......................................... 3
3.8 SEC and Other Reports.......................................... 3
3.9 Litigation..................................................... 3
3.10 No Finders..................................................... 4
3.11 Use of Proceeds................................................ 4
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..................................................... 5
4.5 Purchase Entirely for Own Account.............................. 5
4.6 Disclosure of Information...................................... 5
4.7 Investment Experience.......................................... 5
4.8 Accredited Investor............................................ 5
4.9 Restricted Securities.......................................... 5
4.10 Legends........................................................ 6
4.11 No Finders..................................................... 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...................................... 7
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5.4 Board of Directors............................................. 7
5.5 Voting Agreement............................................... 7
5.6 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...................................... 8
6.5 Voting Agreement............................................... 8
6.6 Registration Rights Agreement.................................. 8
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......................................... 9
7.8 Severability................................................... 9
7.9 Entire Agreement............................................... 9
Schedule 2 Executive Officers and Directors
EXHIBIT A Stock Purchase Warrant
EXHIBIT B Share Ownership, Voting and Right of First Refusal Agreement
EXHIBIT C Registration Rights Agreement
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COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT is made as of March 16, 1998, 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, 350,000 shares
of the Company's Common Stock (the "Purchased Stock") and a warrant for the
purchase of 260,000 shares of the Company's Common Stock (the "Warrant Shares")
in the form attached as Exhibit A (the "Warrant") for an aggregate purchase
price of $2,012,500.
1.2 Closing. The purchase and sale of the Purchased Stock and
Warrant shall take place at the offices of Stoel Rives LLP, 000 XX Xxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxxx, Xxxxxx, at 10:00 A.M. on March 19, 1998, 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 and the Warrant against payment of the purchase price therefor by wire
transfer.
1.3 Further Covenants; Good Faith Negotiation. It is the parties'
intention to enter into an agreement whereby the Company's product and
technology will be incorporated into Investor's products, the terms and
conditions of such agreement to be agreed upon by the parties. The Company and
Investor both agree to use good faith efforts to negotiate and execute such an
agreement.
2. Other Agreements.
2.1 Voting Agreement. The Investor, the Company, and the executive
officers and directors named in Schedule 2 shall enter into the Share Ownership,
Voting and Right of First Refusal Agreement, in the form attached as Exhibit B
(the "Voting Agreement"), that provides that (a) the signatories will vote for
the election of specific nominees to the Company's Board of Directors, (b) the
Investor will vote any additional shares of the Company's Common Stock acquired
by the Investor in a certain manner, (c) the executive officers and management
will agree to certain rights of first refusal on sales of the Company's Common
Stock owned by them, and (d) the Investor will not transfer any shares of the
Company's Common Stock for two years following the Closing, except under certain
circumstances described therein.
2.2 Registration Rights Agreement. The Company agrees to grant
Investor registration rights as set forth in the Registration Rights Agreement
attached as Exhibit C (the "Registration Rights Agreement").
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to Investor that:
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 Voting Agreement and the
Registration Rights Agreement, the performance of all obligations of the Company
hereunder and thereunder, and the authorization, issuance (or reservation for
issuance), sale and delivery of the Purchased Stock and the Warrant Shares has
been taken or will be taken prior to the Closing, and this Agreement, the Voting
Agreement and the 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 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, 3,228,914 of which were issued and outstanding as of February 28,
1998.
(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, the Warrant
and the Warrant Shares, 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 Voting
Agreement and the Registration Rights Agreement and under applicable state and
federal securities laws.
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3.5 Reservation of Warrant Shares. The Warrant Shares have been duly
authorized and reserved and, when issued upon exercise of the Warrant in
accordance with its terms, will be validly issued, fully paid and nonassessable.
3.6 Absence of Conflicting Agreements; Consents. The execution and
delivery of this Agreement, the Voting Agreement and the 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 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 Voting Agreement or the 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.
3.7 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.
3.8 SEC and Other Reports. The Company has heretofore furnished
Investor with 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, 1997 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 1997, including its income statement
and balance sheet, for the fiscal year ended January 3, 1998.
3.9 Litigation. There is no action, proceeding or suit pending, or,
to the Company's knowledge, threatened, that questions the validity of this
Agreement, the Voting Agreement or the Registration Rights Agreement or that
would prevent or materially hinder the consummation of the transactions
contemplated hereby or thereby.
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3.10 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.
3.11 Use of Proceeds. The net proceeds to be received by the Company
from the sale of the Purchased Stock and Warrant Shares 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.
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 Voting Agreement and the 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 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 Voting Agreement and the 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 Voting Agreement by Investor or its consummation of the transactions
contemplated hereby or thereby, except such
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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 Voting Agreement or the Registration Rights Agreement or that
would prevent or materially hinder the consummation of the transactions
contemplated hereby or thereby.
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, the Warrant and Warrant Shares (collectively, the "Securities")
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
Securities.
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 and Warrant. 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
Warrant 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 and Warrant. Investor
also represents it has not been organized for the purpose of acquiring the
Purchased Stock and Warrant.
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 Securities
it is purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are 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 Act only in certain limited circumstances. In this connection, Investor
represents that it
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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
Securities 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 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 Securities are subject to the
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.
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
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shall be reasonably satisfactory in form and substance to Investor, and it shall
have received all such counterpart original and certified or other copies of
such documents as it may reasonably request.
5.4 Board of Directors. At the Closing, Investor's nominee, Xxxxx
Xxxxx, shall be duly elected. The other initial directors of the Company shall
be Xxxx X. Xxxxxx, Xxxx Xxxx and Xxxxxxx X. Xxxxxxx, and there shall be one
vacancy on the Board of Directors to be filled in accordance with the Voting
Agreement.
5.5 Voting Agreement. The Company, the Investor and the Company's
executive officers and directors named in Schedule 2 shall have entered into the
Voting Agreement.
5.6 Registration Rights Agreement. The Company and the Investor
shall have entered into the Registration Rights Agreement.
5.7 1997 Annual Report. The Company shall have provided Investor
with a copy of the Company's Annual Report on Form 10-K for the fiscal year
ended January 3, 1998, which as of the date filed will not contain any untrue
statement of any material fact or omit or misstate a material fact necessary to
make the statements contained in it not misleading, and there shall not have
been a material adverse change in the Company's financial results from those
reported in the earnings release provided to Investor and referenced in Section
3.8 of this 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.
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6.4 Payment of Purchase Price. Investor shall have delivered to the
Company at the Closing the purchase price for the Purchased Stock and Warrant.
6.5 Voting Agreement. The Company, the Investor and the Company's
executive officers and directors named in Schedule 2 shall have entered into the
Voting Agreement.
6.6 Registration Rights Agreement. The Company and the Investor
shall have entered into the 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 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 Securities). 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.
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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 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.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
THE COMPANY:
MICROFIELD GRAPHICS, INC.
By: /s/ Xxxx X. Xxxxxx
----------------------------------------
Xxxx X. Xxxxxx
President and Chief Executive Officer
Address: 0000 XX Xxxxxx Xxxx
Xxxxxxxx, XX 00000
INVESTOR:
STEELCASE INC.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
Address: 000 - 00xx Xxxxxx, X.X.
Xxxxx Xxxxxx, XX 00000
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SCHEDULE 2
Executive Officers and Directors
Xxxx X. Xxxxxx
Xxxxx XxXxx
Xxxxxxx X. Xxxx
Xxxxxxx Xxxxxxxx
Xxxxx Xxxxxx
Xxxxxx Xxxxxxxx
Xxxxxxx X. Xxxxxxx
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