Exhibit 2
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS.
THIS WARRANT IS BY ITS TERMS NONTRANSFERABLE AND THE COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SUCH ACT OR LAWS OR AN OPINION OF COUNSEL FOR THE HOLDER SATISFACTORY TO THE
ISSUER STATING THAT SUCH REGISTRATION IS NOT REQUIRED.
No. 1998-W-1 WARRANT TO PURCHASE 260,000
SHARES OF COMMON STOCK
STOCK PURCHASE WARRANT
TO PURCHASE SHARES OF COMMON STOCK
OF MICROFIELD GRAPHICS, INC.
For value received, Microfield Graphics, Inc., an Oregon corporation (the
"Company"), grants to Steelcase Inc. (the "Holder") the right, subject to the
terms of this Warrant, to purchase at any time during the period commencing on
the "Initial Exercise Date" (as defined below), and ending on the "Expiration
Date" (as defined below), 260,000 fully paid and nonassessable shares of Common
Stock of the Company at the "Exercise Price" (as defined below). This Warrant is
nontransferable (except as provided in Section 8.1) and may be exercised for
all, but not less than all, 260,000 shares in a single exercise. The number of
shares that may be purchased are subject to adjustment under the terms of this
Warrant.
Section 1. Definitions. As used in this Warrant, unless the context otherwise
requires:
"Exercise Amount" means 260,000 shares (adjusted as necessary in accordance
with Section 7).
"Exercise Price" means $6.75 per share.
"Common Stock" means the Common Stock of the Company.
"Company" has the meaning specified in the introductory paragraph.
"Exercise Date" means any date when this Warrant is exercised in the manner
indicated in Sections 2.1 and 2.2.
"Expiration Date" means 12:00 midnight (Portland time) on March 19, 2001.
"Holder" has the meaning specified in the introductory paragraph.
"Initial Exercise Date" means March 19, 1999.
"Person" means an individual, corporation, partnership, trust, joint
venture or other form of business entity.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and all rules and regulations promulgated thereunder, or any act, rules or
regulations which replace the Securities Act or any such rules and regulations.
"Warrant Shares" means the shares of Common Stock issued or issuable upon
exercise of this Warrant, adjusted as necessary in accordance with Section 7.
Section 2. Duration and Exercise of Warrant.
2.1 Exercise Period. Subject to the provisions hereof, this Warrant
may be exercised at any time during the period commencing on the Initial
Exercise Date and ending on the Expiration date for the Exercise Amount. After
the Expiration Date, this Warrant shall become void and all rights to purchase
Warrant Shares hereunder shall thereupon cease.
2.2 Methods of Exercise. This Warrant may be exercised by the Holder
for the Exercise Amount by (i) surrendering this Warrant to the Secretary of the
Company, (ii) payment of any applicable consideration, and (iii) executing and
delivering to the Secretary of the Company the attached Exercise Form, which
must select one of the following exercise methods, to be at the Holder's option:
2.2.1 Exercise for Cash. If the Holder elects to exercise the
Warrant for cash, the Holder shall tender to the Company payment in full by
cash, check, or wire transfer of the Exercise Price for the Warrant Shares.
2.2.2 Same Day Sale Exercise. In lieu of exercising this Warrant by
payment of cash, when permitted by law and applicable regulations (including
Nasdaq and NASD rules), the Holder may pay the Exercise Price through a "same
day sale" commitment from the Holder and a broker-dealer that is a member of the
National Association of Securities Dealers (an "NASD Dealer") whereby the Holder
irrevocably elects to exercise the Warrant and to sell a portion of the Warrant
Shares so purchased to pay for the Exercise Price and whereby the NASD Dealer
irrevocably commits upon receipt of such Warrant Shares to forward the Exercise
Price directly to the Company.
2.3 Certificates. As soon as practicable after exercise of this Warrant,
certificates for Warrant Shares shall be delivered to the Holder.
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2.4 Effective Date of Exercise. This Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above. The person entitled to receive the
Warrant Shares shall be treated for all purposes as the holder of record of such
shares as of the close of business on the date the Holder is deemed to have
exercised this Warrant.
2.5 Securities Act Compliance. Unless the issuance of the Warrant shares
shall have been registered under the Securities Act, as a condition of its
delivery of certificates for the Warrant Shares, the Company may require the
Holder to deliver to the Company, in writing, representations regarding the
Holder's sophistication, investment intent, acquisition for its own account and
such other matters as are reasonable and customary for purchasers of securities
in an unregistered private offering. The Company may place conspicuously upon
each certificate representing the Warrant Shares a legend substantially in the
following form, the terms of which are agreed to by the Holder:
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.
2.6 Taxes. The Company shall pay any tax and other governmental charges
which may be payable in respect of the issuance of the Warrant Shares, provided,
however, that in no case will the Company pay any taxes relating to income to
the Holder resulting from the issuance or exercise of this Warrant.
2.7 Voting Agreement. Upon exercise of this Warrant, Holder acknowledges
that all Common Stock issued under the Warrant shall be subject to the terms and
conditions of that certain Share Ownership, Voting and Right of First Refusal
Agreement dated as of March 19, 1998 between the Company, the Holder and certain
officers and directors of the Company.
Section 3. Warrant Shares.
3.1 Validity and Reservation. The Company covenants that all Warrant
Shares issued upon exercise of this Warrant will be validly issued, fully paid,
nonassessable, free and clear of all liens, security interests, charges and
other encumbrances or restrictions on sale (except
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encumbrances or restrictions arising under federal or state securities laws),
and not subject to preemptive rights. The Company agrees that, as long as this
Warrant may be exercised, the Company will have duly authorized and reserved for
issuance upon exercise of this Warrant a sufficient number of shares of Common
Stock or other shares of capital stock of the Company as are from time to time
issuable upon exercise of this Warrant and from time to time will take all steps
necessary to amend its Articles of Incorporation to provide sufficient reserves
of Common Stock issuable upon exercise of this Warrant. Issuance of this Warrant
shall constitute full authority to the Company's officers who are charged with
the duty of executing stock certificates to execute and issue the necessary
certificates for Common Stock upon the exercise of this Warrant.
Section 4. Fractional Shares.
No fractional Warrant Shares shall be issued upon the exercise of this
Warrant, and the number of Warrant Shares to be issued shall be rounded to the
nearest whole number.
Section 5. Limited Rights of Warrant Holder.
The Holder shall not, solely by virtue of being the Holder of this Warrant,
have any of the rights of a stockholder of the Company, either at law or equity,
until this Warrant shall have been exercised.
Section 6. Loss of Warrant.
Upon receipt by the Company of satisfactory evidence of the loss, theft,
destruction or mutilation of this Warrant and either (in the case of loss, theft
or destruction) reasonable indemnification and a bond satisfactory to the
Company if requested by the Company or (in the case of mutilation) the surrender
of this Warrant for cancellation, the Company will execute and deliver to the
Holder, without charge, a new warrant of like denomination.
Section 7. Certain Adjustments.
7.1 Adjustment of Warrant Shares. The number, class and Exercise Price
per share of securities for which this Warrant may be exercised are subject to
adjustment from time to time upon the happening of certain events as hereinafter
provided:
(a) Recapitalization. If the outstanding shares of the Company's
Common Stock are divided into a greater number of shares, the number of shares
of Common Stock purchasable upon the exercise of this Warrant shall be
proportionately increased and the Exercise Price per share shall be
proportionately reduced. Conversely, if the outstanding shares of Common Stock
are combined into a smaller number of shares of Common Stock, the number of
shares of Common Stock purchasable upon the exercise of this Warrant shall be
proportionately reduced and the Exercise Price per share shall be
proportionately increased. The
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increases and reductions provided for in this Section 7.1(a) shall be made with
the intent and, as nearly as practicable, the effect that neither the percentage
of the total equity of the Company obtainable on exercise of this Warrant nor
the aggregate price payable for such percentage shall be affected by any event
described in this Section 7.1(a).
(b) Merger or Reorganization, Etc. In the event of any change in the
Common Stock through merger, consolidation, reclassification, reorganization,
partial or complete liquidation or other change in the capital structure of the
Company (not including the issuance of additional shares of capital stock other
than by stock dividend or stock split), then, the Holder of this Warrant will
have the right thereafter to receive upon the exercise of this Warrant the kind
and amount of shares of stock or other securities or property to which it would
have been entitled if, immediately before the merger, consolidation,
reclassification, reorganization, recapitalization or other change in the
capital structure, it had held the number of shares of Common Stock obtainable
upon the exercise of this Warrant.
(c) Adjustment for Dividends or Distributions of Stock or Other
Securities or Property. In case the Company shall make or issue, or shall fix a
record date for the determination of eligible holders entitled to receive, a
dividend or other distribution with respect to the Warrant Shares (or any shares
of stock or other securities at the time issuable upon exercise of the Warrant)
payable in (i) securities of the Company or (ii) assets (excluding cash
dividends paid or payable solely out of retained earnings), then, in each such
case, upon exercise of this Warrant at any time after the consummation,
effective date or record date of such dividend or other distribution, the Holder
shall receive, in addition to the Warrant Shares (or such other stock or
securities) issuable on such exercise prior to such date, and without the
payment of additional consideration therefor, the securities or such other
assets of the Company to which such Holder would have been entitled upon such
date if such Holder had exercised this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock available
by it as aforesaid during such period giving effect to all adjustments called
for by this Section 7.
(d) Other Impairments. If any event shall occur as to which the
provisions of Section 7.1(a)-(c) are not strictly applicable but are covered by
the essential intent and principles of such sections, then, in each such case,
the Company will appoint the firm of independent certified public accountants of
recognized national standing with the largest U.S. revenues for the prior year
(but not the Company's regular auditors), which shall give their opinion upon
the adjustment, if any, on a basis consistent with the essential intent and
principles established in this Section 7.1, necessary to preserve the rights
represented by this Warrant. Upon receipt of such opinion, the Company will
promptly mail a copy thereof to the holder of this Warrant and shall make the
adjustments described therein.
7.2 Notice of Adjustment. Whenever an event occurs requiring any
adjustment to be made pursuant to Section 7.1, the Company shall promptly file
with its Secretary or an assistant secretary at its principal office and with
its stock transfer agent, if any, a certificate
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of its President or Chief Financial Officer specifying such adjustment, setting
forth in reasonable detail the acts requiring such adjustment, and stating such
other facts as shall be necessary to show the manner and figures used to compute
such adjustment. Such certificate shall be made available at all reasonable
times for inspection by the Holder. Promptly (but in no event more than 30 days)
after each such adjustment, the Company shall give a copy of such certificate by
certified mail to the Holder.
Section 8. Miscellaneous.
8.1 Assignment. This Warrant may not be transferred or assigned by the
Holder, except to a wholly-owned subsidiary of the Holder.
8.2 Notice. All notices required or permitted under this Warrant shall be
given in writing and shall be deemed effectively given (a) upon personal
delivery to the party to be notified, (b) three days after 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 for such party, (c) one day
after deposit with a nationally recognized air courier service such as DHL or
Federal Express, or (d) on the date of facsimile transmission, with confirmed
transmission.
If to the Company:
-----------------
Microfield Graphics, Inc.
0000 XX Xxxxxx Xxxx
Xxxxxxxx, Xxxxxx 00000
ATTN: Xxxx X. Xxxxxx, President
and Chief Executive Officer
Fax: (000) 000-0000
If to the Holder:
----------------
Steelcase Inc.
000-00xx Xxxxxx X.X.
Xxxxx Xxxxxx, XX 00000
ATTN: Xxxxx X. Xxxxxxx, President and Chief Executive Officer
Fax: (000) 000-0000
or such other address as such party may designate by 10 days' advance written
notice to the other party.
8.3 Governing Law. The validity, interpretation and performance of this
Warrant shall be governed by the laws of the State of Oregon, exclusive of
choice of law rules.
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8.4 No Impairment. The Company will not, by amendment of its Articles of
Incorporation or Bylaws, or through reorganization, consolidation, merger,
dissolution, issue or sale of securities, sale of assets or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder of this Warrant against
impairment. Without limiting the generality of the foregoing, the Company (a)
will not increase the par value of any shares of stock issuable upon the
exercise of this Warrant above the amount payable therefore upon such exercise
and (b) will take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and non-assessable
Warrant Shares upon exercise of this Warrant.
8.5 Notices of Record Date. After the Initial Exercise Date, in case:
8.5.1 the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time receivable upon the exercise of
this Warrant) for the purpose of entitling them to receive any dividend or other
distribution, or any right to subscribe for or purchase any shares of stock of
any class or any securities or to receive any other right; or
8.5.2 of any consolidation or merger of the Company with or into
another corporation, any capital reorganization of the Company, any
reclassification of the capital stock of the Company, or any conveyance of all
or substantially all of the assets of the Company to another corporation in
which holders of the Company's stock are to receive stock, securities or
property of another corporation; or
8.5.3 of any voluntary dissolution, liquidation or winding-up of the
Company; or
8.5.4 of any redemption or conversion of all outstanding Common Stock;
then, and in each such case, the Company will mail or cause to be mailed to
the Holder of this Warrant a notice specifying, as the case may be, (i) the date
on which a record is to be taken for the purpose of such dividend, distribution
or right, or (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation, winding-up,
redemption or conversion is to take place, and the time, if any is to be fixed,
as of which the holders of record of Common Stock (or such stock or securities
as at the time are receivable upon the exercise of this Warrant) shall be
entitled to exchange their shares of Common Stock (or such other stock or
securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be delivered at least
thirty (30) days before the consummation of the applicable event.
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8.6 No Inconsistent Agreements. The Company will not on or after the date
of this Warrant enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the Holder of this Warrant or otherwise
conflicts with the provisions hereof. The rights granted to the Holder hereunder
do not in any way conflict with the rights granted to holders of the Company's
securities under any other agreements, except rights that have been waived.
8.7 Saturdays, Sundays and Holidays. If the Expiration Date falls on a
Saturday, Sunday or legal holiday, the Expiration Date shall automatically be
extended until 5:00 p.m. Pacific Time the next business day.
8.8 Headings. The headings herein are for convenience only and shall not
control or affect the meaning or construction of this Warrant.
Dated as of: March 19, 1998.
MICROFIELD GRAPHICS, INC.
By: /s/ Xxxx X. Xxxxxx
--------------------------
Xxxx X. Xxxxxx, President
and Chief Executive Officer
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EXERCISE FORM
-------------
(To Be Executed by the Warrant Holder
to Exercise the Warrant)
To: MICROFIELD GRAPHICS, INC.
1. The undersigned hereby irrevocably elects to exercise the right to purchase
represented by Warrant No. 1998-W-1 for 260,000 shares of Common Stock, and
to purchase 260,000 shares of Common Stock provided for in the Warrant as
follows [check one]:
[ ] Exercise for Cash: Pursuant to Section 2.2.1 of the Warrant, the
Holder hereby elects to exercise the Warrant for cash and tenders payment
herewith (or has made a wire transfer) to the order of Microfield Graphics, Inc.
in the amount of $____________.
[ ] Same Day Sale Exercise: Pursuant to Section 2.2.2 of the Warrant, the
Holder hereby elects to exercise the Warrant on a cashless basis.
2. The undersigned requests that certificates for such shares of Common Stock
be issued and delivered as follows:
Name:
---------------------------
Address:
------------------------
Deliver to:
---------------------
Address:
------------------------
3. In connection with the exercise of the Warrant, the undersigned hereby
represents and warrants to you as follows:
(a) Purchase Entirely for Own Account. The Common Stock will be acquired
for investment for the undersigned's own account and not with a view to the
resale or distribution of any part thereof, and the undersigned has no
intention of selling, granting any participation in, or otherwise
distributing the same.
(b) Restricted Securities. The undersigned understands the Common Stock may
not be sold, transferred, or otherwise disposed of without registration
under the Securities Act or an exemption therefrom and, in the absence of
an effective registration statement covering the Common Stock or an
available exemption from registration under the Securities Act, the Common
Stock must be held indefinitely.
(c) Investment Experience. The undersigned is experienced in evaluating
and investing in companies in the development stage, can bear the
economic risk of an investment in the Common Stock, and has enough
knowledge and experience in financial and business matters to evaluate
the merits and risks of the investment in the Common Stock.
(d) Qualifications as an Accredited Investor. The undersigned is a
corporation that was not formed for the specific purpose of acquiring
the securities of the Company and has total assets in excess of
$5,000,000.
(e) Opportunity to Review Documents and Ask Questions. The Company has
made available to the undersigned all documents and information
requested by the undersigned relating to an investment in the Company.
In addition, the undersigned has had adequate opportunity to ask
questions and to receive answers from the management of the Company
covering the terms and conditions of the offering and the Company's
business, management, and financial affairs.
4. The undersigned understands, agrees, and recognizes that:
(a) No federal or state agency has made any finding or determination as to
the fairness of the investment or any recommendation or endorsement of
the Common Stock.
(b) All certificates evidencing the Common Stock shall bear a legend
substantially similar to the legend set forth in Section 2.5 of the
Warrant regarding resale restrictions.
(c) All shares of Common Stock issued upon exercise of this Warrant shall
be subject to the Voting Agreement referenced in Section 2.7 of the
Warrant and all certificates shall also bear a legend stating that the
Common Stock issued is subject to the Voting Agreement.
5. The undersigned is a resident of the state of ________________________.
Dated: _____________, 19___.
STEELCASE INC.
By:
-----------------------
Name:
---------------------
Title:
--------------------
Note: Signature must correspond with the
name as written upon the face of the
Warrant in every particular, without
alteration or enlargement or any change
whatsoever.
