EXHIBIT B
SHARE OWNERSHIP, VOTING
AND RIGHT OF FIRST REFUSAL AGREEMENT
This SHARE OWNERSHIP, VOTING AND RIGHT OF FIRST REFUSAL AGREEMENT (the
"Agreement") is entered into as of March 19, 1998 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. Steelcase proposes to acquire, pursuant to a Common Stock Purchase
Agreement dated as of March 16, 1998, shares of the Company's Common Stock (the
"Common Stock").
B. Steelcase, Company and the Executives agree to limitations on transfer
and voting of shares of Common Stock owned by each of them, on the terms set
forth 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:
"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-1(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.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"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.
"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.
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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; (b) except as permitted by this Agreement or the 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 or the
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 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 610,000 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 director-nominees 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
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proviso in the preceding sentence, his successor shall be selected in the manner
described in Schedule 3.3.
3.4 AFFILIATES. 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 and that prior to any such transfer such Affiliates 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.
4.2 STEELCASE. Steelcase shall not transfer any Shares until the
second anniversary of the Closing, other than to a Steelcase Affiliate.
Notwithstanding the foregoing, the obligations set forth in this Agreement shall
continue to be applicable to (a) any Steelcase Affiliate who is a transferee of
Steelcase's Shares, and (b) 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
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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.
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
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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.
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 or 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.
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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.
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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
MICROFIELD GRAPHICS, INC.
-------------------------------------
Xxxx X. Xxxxxx
President and Chief Executive Officer
STEELCASE INC.
------------------------------------
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
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EXECUTIVES:
------------------------------
Xxxx X. Xxxxxx
------------------------------
Xxxxx XxXxx
------------------------------
Xxxxxxx X. Xxxx
------------------------------
Xxxxxxx Xxxxxxxx
------------------------------
Xxxxx Xxxxxx
------------------------------
Xxxxxx Xxxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxx
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SCHEDULE A
EXECUTIVES
Xxxx X. Xxxxxx
Xxxxx XxXxx
Xxxxxxx X. Xxxx
Xxxxxxx Xxxxxxxx
Xxxxx Xxxxxx
Xxxxxx Xxxxxxxx
Xxxxxxx X. Xxxxxxx
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SCHEDULE 3.3
DIRECTOR-NOMINEES
Xxxx X. Xxxxxx (or the successor Chief Executive Officer of the Company)
Xxxxxxx X. Xxxxxxx (or his successor selected as described below)
Xxxx Xxxx (or his successor selected as described below)
Xxxxx X. Xxxxx (or a successor designated in writing by Steelcase)
One other director-nominee acceptable to the majority of the directors then in
office.
If Xx. Xxxxxxx or Xx. Xxxx 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. Xxxxxxx, Xxxxx and Xxxx shall be considered the initial "Independent
Directors" for purposes of the Share Ownership, Voting and Right of First
Refusal Agreement.
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