-----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, NNDPVv96aq9A1aCi12gR/FGfPNPY3L65C70ns5vwAyRVTnwdMbP0oSg/wIw7liBf stLFX6DZqWaVjbT131N/Vw== 0001157523-03-000577.txt : 20030307 0001157523-03-000577.hdr.sgml : 20030307 20030307121722 ACCESSION NUMBER: 0001157523-03-000577 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20030307 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: STEELCASE INC CENTRAL INDEX KEY: 0001050825 STANDARD INDUSTRIAL CLASSIFICATION: OFFICE FURNITURE (NO WOOD) [2522] IRS NUMBER: 380819050 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-55759 FILM NUMBER: 03595689 BUSINESS ADDRESS: STREET 1: 901 44TH ST CITY: GRAND RAPIDS STATE: MI ZIP: 49508 BUSINESS PHONE: 6162472710 MAIL ADDRESS: STREET 1: 901 44TH ST CITY: GRAND RAPIDS STATE: MI ZIP: 49508 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: STEELCASE INC CENTRAL INDEX KEY: 0001050825 STANDARD INDUSTRIAL CLASSIFICATION: OFFICE FURNITURE (NO WOOD) [2522] IRS NUMBER: 380819050 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 901 44TH ST CITY: GRAND RAPIDS STATE: MI ZIP: 49508 BUSINESS PHONE: 6162472710 MAIL ADDRESS: STREET 1: 901 44TH ST CITY: GRAND RAPIDS STATE: MI ZIP: 49508 SC 13D/A 1 a4351966.txt STEELCASE ---------------------------------------------------- OMB APPROVAL ---------------------------------------------------- OMB Number: 3235-0145 Expires: December 31, 2005 Estimated average burden hours per response................................11 ---------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D/A Under the Securities Exchange Act of 1934 (Amendment No. 3 )* Microfield Graphics, Inc. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock - -------------------------------------------------------------------------------- (Title of Class of Securities) 59506W 10 4 (CUSIP Number) Sheila C. Dayton, Steelcase Inc., 901-44th Street S.E., Grand Rapids, MI 49508, (616) 246-9467 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) - -------------------------------------------------------------------------------- February 28, 2003 - -------------------------------------------------------------------------------- (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this Schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. |_| Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See ss.240.13d-7 for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. 1 - -------------------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only)................ - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a).....................................................................|_| (b).....................................................................|_| - -------------------------------------------------------------------------------- 3. SEC Use Only............................................................... - -------------------------------------------------------------------------------- 4. Source of Funds (See Instructions)......................................... - -------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e).................................................................|_| - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization....................................... - -------------------------------------------------------------------------------- 7. Sole Voting Power........................951,445 ------------------------------------------------------ Number of 8. Shared Voting Power............................0 Shares Bene- ficially ------------------------------------------------------ Owned by Each 9. Sole Dispositive Power...................951,445 Reporting Person With: ------------------------------------------------------ 10. Shared Dispositive Power.......................0 - -------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person........951,445 - -------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)...........................................................|_| - -------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11)....................11.7% - -------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions)................................ - -------------------------------------------------------------------------------- 2 This Amendment No. 3 is being filed to amend the Schedule 13D filed by Steelcase Inc. on March 30, 1998, as amended on September 10, 1998 and April 16, 1999. Item 1. Security and Issuer. The title of the class of equity securities to which this statement relates is Common Stock ("Common Stock"), of Microfield Graphics, Inc., an Oregon corporation (the "Company"). The address of the Company's principal executive offices is 1631 NW Thurman, Suite 310, Portland, Oregon 97209. Item 2. Identity and Background. This statement is being filed by Steelcase Inc. ("Steelcase"), a Michigan corporation. The principal business of Steelcase is the manufacture of office furniture and related products. The principal business and office address of Steelcase is 901-44th Street S.E., Grand Rapids, Michigan 49508. Steelcase has not, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). Steelcase has not, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration. Pursuant to the terms of a Stock Purchase and Pledge Agreement, dated as of February 28, 2003, between the Company and Steelcase (the "Agreement"), the Company is purchasing 951,445 shares of Common Stock (the "Shares") from Steelcase for $0.22 per share, or $209,317.90 (the "Purchase Price"). The Purchase Price is payable pursuant to a Promissory Note (the "Note") from the Company in favor of Steelcase. The Note is payble over three years, with equal principal payments due on the first, second and third anniversary of the date of the Note and interest accruing at 12% per annum, due quarterly during the term of the Note. The Purchase Price is subject to adjustment, as further described in the Agreement and the Note. Pursuant to the Agreement, the Purchase Price is secured by a pledge of the Shares in favor of Steelcase. The Agreement is attached hereto as Exhibit 1 and is incorporated herein by reference and the Note is attached hereto as Exhibit 2 and is incorporated herein by reference. Item 4. Purpose of Transaction. Steelcase is selling the Purchased Shares to the Company pursuant to the Agreement because the parties have determined that a continued joint development of products by the Company and Steelcase is no longer economically beneficial to either party. Steelcase, therefore, desires to terminate its investment in the Company and the Company desires to redeem the Shares for use in future transactions with other investors. 3 Other than as described above, Steelcase does not have any current plans or proposals which relate to or would result in (i) the acquisition by any person of additional securities of the Company, or the disposition of securities of the Company, (ii) any extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries, (iii) any sale or transfer of a material amount of assets of the Company or any of its subsidiaries, (iv) any change in the present board of directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the Board, (v) any material change in the Company's present capitalization or dividend policy, (vi) any other material change in the Company's business or corporate structure, (vii) any changes in the Company's Articles of Incorporation or Bylaws or other actions which may impede the acquisition of control of the Company by any person, (viii) causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association, (ix) a class of the Company's equity securities becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended, or (x) any action similar to those enumerated above. Item 5. Interest in Securities of the Issuer. As of February 28, 2003, after the transactions contemplated by the Agreement, the number of shares of Common Stock beneficially owned by Steelcase is 0, and Steelcase ceased to be the beneficial owner of more than 5% of Company Common Stock. Pursuant to the Agreement, Steelcase will retain a security interest in the Shares until the Note is fully paid. Absent an Event of Default (as defined in the Agreement), Steelcase will have no power to vote or dispose of the Shares. Steelcase will, however, retain the registration rights applicable to the Shares, granted pursuant to the Registration Rights Agreement dated March 19,1998, between Steelcase and the Company (the "RR Agreement"), as amended by Amendment No. 1 to Registration Rights Agreement, dated March 25, 1999 ("Amendment No. 1"). The RR Agreement is attached as Exhibit 4 to Steelcase's Schedule 13D, filed March 31, 1998, and is incorporated herein in its entirety. Amendment No. 1 is attached as Exhibit 3 to Steelcase's Amendment No. 2 to Schedule 13D, filed April 19, 1999, and is incorporated herein in its entirety. Other than as disclosed above, no transactions involving Common Stock were effected by Steelcase within the sixty days prior to the date of this Amendment No. 3 to Schedule 13D. No person is known to have the right to receive, or the power to direct the receipt of, dividends from, or the proceeds from the sale of, the Common Stock owned by Steelcase. 4 Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. Pursuant to the Agreement, Steelcase has retained a security interest in the Shares until the Note is paid in full. Absent an Event of Default (as defined in the Agreement), Steelcase will have no power to vote or dispose of the Shares. Steelcase will, however, retain the registration rights applicable to the Shares, granted pursuant to RR Agreement, as amended by Amendment No. 1. The RR Agreement provides that upon request by Steelcase, the Company will effect, subject to certain limitations, the registration under the Securities Act of 1933, as amended, of the Shares. The RR Agreement is more fully described under Item 4 to Amendment No. 2 to Schedule 13D, filed April 19, 1999. Item 7. Material to be Filed as Exhibits. The following exhibits are filed with this Statement: 1. Stock Purchase and Pledge Agreement, dated February 28, 2003, between Microfield Graphics, Inc. and Steelcase Inc. 2. Promissory Note, dated February 28, 2003, from Microfield Graphics, Inc., in favor of Steelcase Inc. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: March 7, 2003 STEELCASE INC. By: /s/ James P. Keane --------------------------- Senior Vice President, Chief Financial Officer Exhibit Index Exhibit Description 1. Stock Purchase and Pledge Agreement, dated as of February 28, 2003, between Microfield Graphics, Inc. and Steelcase Inc. 2. Promissory Note, dated February 28, 2003, given by Microfield Graphics, Inc., in favor of Steelcase Inc. 5 EX-99 3 a4351966_ex1.txt STEELCASE- EXHIBIT 1 Exhibit 1 STOCK PURCHASE AND PLEDGE AGREEMENT This STOCK PURCHASE AND PLEDGE AGREEMENT (this "Agreement"), dated as of February 28, 2003, is made by and between Microfield Graphics, Inc. ("Pledgor") and Steelcase Inc. ("Pledgee"). RECITALS A. Pledgor desires to purchase from Pledgee 951,445 shares of Pledgor Common Stock (the "Common Stock") owned by Pledgee (the "Purchase"), and Pledgee desires to sell such Common Stock to Pledgor, pursuant to the terms and conditions set forth below. B. The purchase price for the Common Stock ("Purchase Price") will be paid over three years, subject to adjustment as described below, and will be evidenced by a Promissory Note from Pledgor to Pledgee dated as of the date hereof (the "Note"). C. As a condition to permitting payment of the purchase price by the Note, Pledgee has required that Pledgor grant Pledgee a continuing security interest in the Common Stock, on the terms and conditions set forth in this Agreement, and Pledgor has agreed to make such pledge. NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Purchase and Sale. Upon the terms and conditions set forth in this Agreement, Pledgee hereby sells, assigns and delivers to Pledgor, and Pledgor hereby purchases and accepts from Pledgee, the Common Stock. Pledgee represents and warrants to Pledgor (i) that it owns the Common Stock free and clear of any liens (including tax liens), forfeitures, pledges, penalties, charges, encumbrances, buy-sell agreements, rights of first refusal, equities or claims or rights of others whatsoever, (ii) it is the owner of record and the beneficial owner of the Common Stock and (iii) it has the requisite power, authority and legal right to transfer the Common Stock to Pledgor, and this Agreement constitutes the legal, valid and binding obligation of Pledgee, enforceable against Pledgee in accordance with its terms. Except as set forth in this Section 1, Pledgee makes no representations or warranties with regard to the Common Stock or its ownership in such Common Stock, and Pledgor understands and agrees that it is purchasing the Common Stock without relying upon any such representations or warranties from Pledgee. 2. Purchase Price. In consideration of the sale, assignment and delivery of the Common Stock, Pledgor will pay to Pledgee for the Common Stock an amount equal to $0.22 per share of Common Stock, or $209,317.90, subject to adjustment as described in Section 3 below. Notwithstanding anything in this Agreement to the contrary, at any time within 180 days after the date of this Agreement, Pledgor may prepay the entire deferred purchase price owed under the Note by making a lump sum payment of $0.20 per share (as appropriately adjusted to reflect the value of the Common Stock after giving effect to stock splits, dividends, reorganizations and recapitalizations and other similar transactions occurring after the date hereof), or $190,289, together with all accrued and unpaid interest through the date of such prepayment. 1 3. Purchase Price Adjustment. a. Maturity Date Adjustment. Unless previously calculated pursuant to Section 3.b below, on the third anniversary of the date hereof (the "Maturity Date"), the parties shall calculate the average closing price of Pledgor's common stock on the principal market on which such common stock is traded, for each day the common stock is traded within the 180 day period ending on the last business day immediately prior to the Maturity Date (the "Average Share Price"). If the Average Share Price is greater than $0.22 per share, the purchase price payable hereunder will increase to the amount equal to the sum of (a) $209,317.90 plus (b) an additional amount which equals 951,445 shares (as appropriately adjusted to reflect the value of the Common Stock after giving effect to stock splits, dividends, reorganizations, recapitalizations and other similar transactions occurring after the date hereof) multiplied by the excess of the Average Share Price over $0.22 per share (as appropriately adjusted to reflect the value of the Common Stock after giving effect to stock splits, dividends, reorganizations and recapitalizations and other similar transactions occurring after the date hereof). The principal amount payable under the Note will be increased accordingly. Thus, for example, if the Average Share Price is $0.30 per share, on the Maturity Date, the total purchase price payable hereunder will equal $285,433.50 ($209,317.90 plus $76,115.60 (951,445 shares (as adjusted) multiplied by $0.08 per share)). Notwithstanding the foregoing, the maximum Average Share Price permitted will be $0.35 (as appropriately adjusted to reflect the value of the Common Stock after giving effect to stock splits, dividends, reorganizations and recapitalizations and other similar transactions occurring after the date hereof). b. Prepayment Adjustment. If the Note is prepaid, after the initial 180 day period provided in Section 1, the Average Share Price shall be calculated by using the average closing price of Pledgor's common stock on the principal market on which such common stock is traded, for each day the common stock is traded within the 180 day period ending on the last business day immediately prior to the prepayment date. Once the Average Share Price has been determined, the parties will use the formula set forth in Section 3.a above to calculate any increase in the purchase price. Any purchase price increase will be evidenced by an increase in the principal amount due under the Note, and such increase will be paid on the prepayment date. Notwithstanding the foregoing, the maximum Average Share Price permitted will be $0.35 (as appropriately adjusted to reflect the value of the Common Stock after giving effect to stock splits, dividends, reorganizations and recapitalizations and other similar transactions occurring after the date hereof). If the parties calculate the Average Share Price pursuant to this Section 3.b, there shall be no additional adjustment on the Maturity Date pursuant to Section 3.a above. 2 c. Sale Adjustment. Unless otherwise previously paid in accordance with the terms of the Note, in addition to the purchase price adjustment contemplated by Sections 3.a or 3.b above, if at any time within eighteen (18) months of the date of this Agreement: I. (i) Pledgor engages in a transaction or series of related transactions which results in a sale of all or substantially all of its assets or (ii) Pledgor and its shareholders engage in a transaction or a series of related transactions (whether by stock sale, merger, consolidation or other type of transaction) as a result of which (x) the holders of the shares of Pledgor common stock issued and outstanding immediately prior to such transaction(s) hold less than 50% of the voting power of Pledgor or other surviving entity of such transaction(s), and (y) the majority of the Board of Directors of Pledgor or such surviving entity following such transaction(s) were not members of the Board of Directors of Pledgor immediately prior to such transaction(s), the Note shall become immediately due payable, plus all accrued and unpaid interest, and payable and the purchase price for the Common Stock shall be increased by an amount equal to the excess value, over the amount of the Note, which Pledgee would have received if it had been the owner of the Common Stock at the time of such transaction(s), with such excess consideration payable in the same form received by the shareholders of Pledgor in such transaction(s). II. Pledgor issues shares of its stock in a transaction or a series of related transactions and, as a result, (x) the number of shares of Pledgor common stock issued and outstanding following such transaction(s) is more than twice the number of shares of Pledgor common stock issued and outstanding as of the date of the Note (excluding, for the purpose of such calculation, the Common Stock) and (y) the majority of the Board of Directors of Pledgor following such transaction(s) were not members of the Board of Directors of Pledgor as of the date of the Note, then the Note shall become immediately due and payable, plus all accrued and unpaid interest, and the purchase price for the Common Stock shall be increased by an amount equal to the market value of the Common Stock, measured immediately prior to the time of such transaction(s), less the amount of the Note, payable by the issuance by Pledgor of a number of shares of Pledgor common stock equal to (a) such excess value divided by (b) the market value of a share of Pledgor common stock measured immediately after the time of such transaction(s). 4. Pledge. As collateral security for the payment and performance when due of the Note, Pledgor hereby pledges, assigns, transfers and grants to Pledgee for its benefit, a continuing first priority security interest in and to all of the right, title and interest of Pledgor in, to and under the Common Stock, including all dividends (including dividends payable in the form of additional shares of Pledgor common stock), cash, options, warrants, rights, instruments, distributions, returns of capital, income, profits and other property, interests or proceeds from time to time received, receivable or otherwise distributed to Pledgor in respect of or in exchange for any or all of the Common Stock (any such distribution will be deemed to be part of the Common Stock). In addition, the security interest will include all registration rights granted pursuant to the Registration Rights Agreement, dated March 19, 1998, as amended, between Pledgor and Pledgee. 3 5. Secured Obligations. This Agreement secures, and the Common Stock are collateral security for, the payment and performance in full when due, whether at stated maturity, by acceleration or otherwise of the Note (including, without limitation, obligations to pay principal, interest and all other charges, fees, expenses, commissions, reimbursements, premiums, indemnities and other payments related to or in respect of the Note). 6. Delivery of Common Stock. All certificates or instruments representing or evidencing the Common Stock will immediately upon execution of this Agreement be delivered to the Pledgee and held by the Pledgee on the terms herein. All Common Stock will be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to the Pledgee. Pledgee may, from time to time, in its sole discretion, appoint one or more agents or nominees to hold physical custody, for the account of Pledgee, of any or all certificates representing the Common Stock. 7. Representations, Warranties and Covenants. Pledgor represents, warrants and covenants as follows: (a) No Liens. Following the sale transaction contemplated by this Agreement, and at the time of any delivery of any Common Stock to Pledgee pursuant to Section 6 of this Agreement Pledgor will be, the sole legal and beneficial owner of the Common Stock. All shares of Common Stock are on the date hereof, and will be, so owned by Pledgor free and clear of any liens (including tax liens), forfeitures, pledges, penalties, charges, encumbrances, buy-sell agreements, rights of first refusal, equities or claims or rights of others whatsoever except for the lien created by this Agreement. (b) Authorization; Enforceability. Pledgor has the requisite power, authority and legal right to pledge and grant a security interest in the Common Stock pursuant to this Agreement, and this Agreement constitutes the legal, valid and binding obligation of Pledgor, enforceable against Pledgor in accordance with its terms. (c) No Consents. No consent of any and no consent, authorization, approval, license or other action by, and no notice to or filing with, any governmental authority or regulatory body or other person is required on the date hereof for the pledge by Pledgor of the Common Stock pursuant to this Agreement or for the execution, delivery or performance of this Agreement by Pledgor. 8. Voting Rights. (a) So long as no Event of Default (as defined in the Note) will have occurred, Pledgor will be entitled to exercise any and all voting and other consensual rights pertaining to the Common Stock or any part thereof for any purpose not inconsistent with the terms or purpose of this Agreement; provided, however, that Pledgor will not in any event exercise such rights in any manner which will reasonably be expected to have a material adverse effect on the validity of the security interest intended to be provided by this Agreement. 4 (b) Upon the occurrence of an Event of Default and delivery of the Common Stock (as contemplated under Section 11 below), all rights to exercise the voting and other consensual rights Pledgor would otherwise be entitled to exercise pursuant to Section 8(a) hereof will cease, and all such rights will thereupon become vested in the Pledgee, which will thereupon have the sole right to exercise such voting and other consensual rights. 9. Dividends on Common Stock. All dividends on the Common Stock shall be paid to Pledgor, provided that no Event of Default shall have occurred and be continuing. 10. Transfers. Pledgor will not (i) sell, convey, assign or otherwise dispose of, or grant any option, right or warrant with respect to, any of the Common Stock or (ii) create or permit to exist any lien upon or with respect to any Common Stock other than the lien and security interest granted to Pledgee pursuant to this Agreement. 11. Remedies upon Default. Upon the occurrence of an Event of Default, Pledgee will have the right, in addition to any other remedy available to Pledgee, to foreclose on the Common Stock from Pledgor and take and exercise all rights of ownership with respect thereto, including causing the registration of the Common Stock in the name of Pledgee or its designee(s). 12. No Waiver; Cumulative Remedies. No failure on the part of Pledgee to exercise, no course of dealing with respect to, and no delay on the part of Pledgee in exercising, any right, power or remedy hereunder will operate as a waiver thereof; nor will any single or partial exercise of any such right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies herein provided are cumulative and are not exclusive of any remedies provided by law, at equity or otherwise. 13. Modification in Writing. No amendment, modification, supplement, termination or waiver of or to any provision of this Agreement, nor consent to any departure by Pledgor therefrom, will be effective unless in writing and signed by Pledgor and Pledgee. Any amendment, modification or supplement of or to any provision of this Agreement, any waiver of any provision of this Agreement and any consent to any departure by Pledgor from the terms of any provision of this Agreement will be effective only in the specific instance and for the specific purpose for which made or given. 14. Termination; Release; Reinstatement. (a) On the second anniversary of the date of this Agreement, if Pledgor has made all due and owing payments in accordance with the terms of this Agreement and the Note, Pledgee will execute and deliver a release of its security interest on 317,148 shares of common stock (one-third of the Common Stock) (the "Released Shares"), and will redeliver to Pledgor such Released Shares. 5 (b) When the Note has been paid and performed in full, this Agreement will terminate and Pledgee will return the Note to Pledgor, marked "Cancelled". Upon termination of this Agreement, Pledgee will redeliver to Pledgor the Common Stock as may still be in the possession of Pledgee and as will not have been previously transferred to the Pledgee pursuant to the terms hereof. (c) If any of the payments under the Note are recovered or subsequently set aside, invalidated, declared to be fraudulent or preferential or required to be repaid, this Agreement will be reinstated and Pledgor will take all steps reasonably required to effectuate such a reinstatement, including the redelivery to Pledgee of the Common Stock to be held as security hereunder. 15. Attorney-in-Fact. Pledgor hereby irrevocably appoints Pledgee as his attorney-in-fact to arrange for the transfer, at any time after the occurrence of an Event of Default, of the Common Stock on the books and records of Pledgor to the name of Pledgee or his nominee. 16. Further Assurances. From time to time upon the written request of either party, such other party will execute and deliver such further documents and do such further things as the requesting party may reasonably request in order to effect the purposes of this Agreement. 17. Notices. Any notice or other communication required or permitted to be given under this Agreement will be sufficient if it is in writing and delivered personally, telecopied or mailed, certified, registered or first-class mail, or recognized overnight courier, postage prepaid, and will be deemed given when so delivered personally or telecopied, or, if mailed by certified, registered or first-class mail, five business days after the date of mailing, or, if mailed by recognized overnight courier, one day after the date of mailing, addressed (or as otherwise specified by any party by notice to the other party in accordance with this Section, provided that change of address notices will be effective only upon receipt thereof), in the case of Pledgee, to Steelcase Inc., 901-44th Street S.E., Grand Rapids, Michigan 49508, Attention: Chief Legal Officer, and in the case of Pledgor, to Microfield Graphics, Inc., 1631 N.W. Thurman, 3rd Floor, Portland, Oregon 97209, Attn: Steven M. Wright, President. 18. Governing Law. This Agreement and the rights, remedies and duties of the parties in connection with this Agreement will be governed by, and will be construed and enforced in accordance with, the laws of the State of Oregon, without regard to principles of conflicts of laws. 19. Entire Agreement. This Agreement and the Note contain the entire agreement among the parties with respect to the transactions contemplated by this Agreement and the Note, and supersedes all prior agreements or commitments, written or oral, with respect thereto. 20. Severability of Provisions. Any provision of this Agreement which is prohibited or unenforceable will be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof. 6 21. Headings. The Section headings used in this Agreement are for convenience of reference only and will not affect the construction of this Agreement. 22. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. IN WITNESS WHEREOF, Pledgor and Pledgee have caused this Stock Purchase and Pledge Agreement to be duly executed and delivered as of the date first above written. MICROFIELD GRAPHICS, INC. By: /s/ Steve Wright ------------------------------ Its: CEO/President STEELCASE INC. By: /s/ Terrance J. Lenhardt ------------------------------ Its: V.P. Corporate Strategy & Development 2/28/03 7 EX-99 4 a4351966_ex2.txt STEELCASE- EXHIBIT 2 Exhibit 2 PROMISSORY NOTE Up to $333,005.75 February 28, 2003 FOR VALUE RECEIVED, Microfield Graphics, Inc. ("Payor"), promises to pay Steelcase Inc. ("Holder"), at 901-44th Street S.E., Grand Rapids, Michigan 49508, or at such other place as Holder may from time to time designate in writing, the principal sum of up to Three Hundred Thirty-Three Thousand Five Dollars and Seventy-Five Cents ($333,005.75) (the "Maximum Amount"), as further described in Section 1 below, together with interest as provided below, in lawful money of the United States, with the principal and interest to be due and payable as provided in Section 3 below. This Note may not be transferred other than to one or more affiliates of Holder. 1. DEFERRED PURCHASE PRICE Pursuant to the terms of a Stock Purchase and Pledge Agreement, dated as of the date hereof, between Payor and Holder (the "Agreement"), Payor has purchased from Holder 951,445 shares of Payor Common Stock (the "Common Stock") for Two Hundred Nine Thousand Three Hundred Seventeen Dollars and Ninety Cents ($209,317.90) (the "Base Amount"), or $0.22 per share, subject to adjustment. This Note evidences the deferred purchase price for the Common Stock. Payments of principal under this Note shall be made in three equal annual installments of $69,772.64, on the first, second and third anniversary of the date of this Note. Unless previously calculated pursuant to Section 3 below, on the third anniversary of the date of this Note (the "Maturity Date"), the parties shall calculate the average closing price of Payor's common stock on the principal market on which such common stock is traded, for each day the common stock is traded within the 180 day period ending on the last business day immediately prior to the Maturity Date (the "Average Share Price"). If the Average Share Price is greater than $0.22 per share, the purchase price payable under the Agreement will increase to the amount equal to the sum of (a) $209,317.90 plus (b) an additional amount which equals 951,445 shares (as appropriately adjusted to reflect the value of the Common Stock after giving effect to stock splits, dividends, reorganizations and recapitalizations and other similar transactions occurring after the date hereof) multiplied by the excess of the Average Share Price over $0.22 per share (as appropriately adjusted to reflect the value of the Common Stock after giving effect to stock splits, dividends, reorganizations and recapitalizations and other similar transactions occurring after the date hereof). Thus, for example, if the Average Share Price is $.30 per share, the purchase price for the Common Stock would be increased by $76,115.60 (951,445 shares (as adjusted) multiplied by $0.08 per share), to $285,433.50. Any purchase price increase will be evidenced by an increase in the principal amount due under this Note, and such increase will be paid on the Maturity Date. Notwithstanding the foregoing, the maximum Average Share Price permitted will be $0.35 (as appropriately adjusted to reflect the value of the Common Stock after giving effect to stock splits, dividends, reorganizations and recapitalizations and other similar transactions occurring after the date hereof). 1 Unless otherwise previously paid in accordance with the terms of this Note, if at any time within eighteen (18) months of the date of this Note, (i) Payor engages in a transaction or series of related transactions which results in a sale of all or substantially all of its assets or (ii) Payor and its shareholders engage in a transaction or a series of related transactions (whether by stock sale, merger, consolidation or other type of transaction) as a result of which (x) the holders of the shares of Payor common stock issued and outstanding immediately prior to such transaction(s) hold less than 50% of the voting power of Payor or other surviving entity of such transaction(s), and (y) the majority of the Board of Directors of Payor or such surviving entity following such transaction(s) were not members of the Board of Directors of Payor immediately prior to such transaction(s), this Note shall become immediately due and payable, plus all accrued and unpaid interest, and the purchase price for the Common Stock shall be increased by an amount equal to the excess value, over the amount of this Note, which Holder would have received if it had been the owner of the Common Stock at the time of such transaction(s), with such excess consideration payable in the same form received by the shareholders of Payor in such transaction(s). If at any time within eighteen (18) months of the date of this Note, Payor issues shares of its stock in a transaction or a series of related transactions and, as a result, (x) the number of shares of Payor common stock issued and outstanding following such transaction(s) is more than twice the number of shares of Payor common stock issued and outstanding as of the date of this Note (excluding, for the purpose of such calculation, the Common Stock) and (y) the majority of the Board of Directors of Payor following such transaction(s) were not members of the Board of Directors of Payor as of the date of this Note, then this Note shall become immediately due and payable, plus all accrued and unpaid interest, and the purchase price for the Common Stock shall be increased by an amount equal to the market value of the Common Stock, measured immediately prior to the time of such transaction(s), less the amount of the Note, payable by the issuance by Payor of a number of shares of Payor common stock equal to (a) such excess value divided by (b) the market value of a share of Payor common stock measured immediately after the time of such transaction(s). Notwithstanding anything in this Note to the contrary, at any time within 180 days after the date of this Note, Payor may prepay the entire deferred purchase price owed hereunder by making a lump sum payment of $0.20 per share (as appropriately adjusted to reflect the value of the Common Stock after giving effect to stock splits, dividends, reorganizations and recapitalizations and other similar transactions occurring after the date hereof), or $190,289, together with all accrued and unpaid interest as of the date of such payment. 2. RATE OF INTEREST The indebtedness outstanding hereunder from time to time prior to the Maturity Date shall bear interest, on the basis of a year of 360 days for the actual number of days elapsed, at the rate of 12% per annum. 3. PAYMENTS AND PREPAYMENTS Interest accruing under this Note shall be payable quarterly, on the 1st day of March, June, September and December, commencing June 1, 2003. Principal payments shall be made in accordance with Section 1 above. The entire unpaid principal balance, together with all accrued and unpaid interest owing hereunder, shall be due and payable on the Maturity Date. All payments on this Note shall be applied first to the payment of accrued interest, and the remainder, if any, to the payment of principal. 2 This Note may be prepaid in whole, but not in part, at any time, without premium or penalty. If this Note is prepaid after the initial 180 day period provided in Section 1, the Average Share Price shall be calculated by using the average closing price of Payor's common stock on the principal market on which such common stock is traded, for each day the common stock is traded within the 180 day period ending on the last business day immediately prior to the prepayment date. Once the Average Share Price has been determined, the parties will use the formula set forth in Section 1 to calculate any increase in the purchase price. Any purchase price increase will be evidenced by an increase in the principal amount due under this Note, and such increase will be paid on the prepayment date. Notwithstanding the foregoing, the maximum Average Share Price permitted will be $0.35 (as appropriately adjusted to reflect the value of the Common Stock after giving effect to stock splits, dividends, reorganizations and recapitalizations and other similar transactions occurring after the date hereof). If the parties calculate the Average Share Price pursuant to this Section 3, there shall be no additional adjustment on the Maturity Date pursuant to Section 1 above. 4. EVENTS OF DEFAULT 4.1 Default and Acceleration. If any of the following events shall occur, Holder may declare the entire unpaid principal and accrued interest on this Note immediately due and payable, by a notice in writing to Payor: (a) Default in the payment of any installment of principal or interest on the due date therefor, which default is not cured within 10 days after written notice from Holder; or (b) The commencement of an action by or against Payor seeking any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar relief under any present or future statute, law or regulation, or the appointment, with or without the consent or acquiescence of Payor, of any trustee, receiver or liquidator of Payor or of all or any substantial part of the properties of Payor, or the making by Payor of an assignment for the benefit of creditors, or the admission by Payor in writing of its inability to pay its debts generally as they become due; or (c) Breach or default by Payor under the Agreement, which breach or default is not cured within 10 days after written notice from Holder. 4.2 Costs of Collection. Payor shall pay all costs of collection and enforcement of this Note, including reasonable attorneys' fees and court costs. [MUTUAL] 5. MISCELLANEOUS 5.1 Waiver. Payor hereby waives presentment and demand, notice of demand or dishonor and expressly agrees that the maturity of this Note, or any payment hereunder may be extended from time to time without in any way affecting the liability of Payor. 3 5.2 Security. This Note is secured by the pledge of the Common Stock pursuant to the Agreement. 5.3 Applicable Law. This Note, being delivered and accepted by Holder in the State of Oregon, shall be governed and construed according to the internal laws of the State of Oregon (without giving effect to conflict of laws principles). 4 5.4 Interest Rate Limitation. Notwithstanding any provisions of this Note or the Agreement, in no event will the amount of interest paid or agreed to be paid by Payor exceed an amount computed at the highest rate of interest permissible under applicable law. If, from any circumstances whatsoever, fulfillment of any provision of this Note or the Agreement at the time performance of such provision will be due will involve exceeding the interest rate limitation validly prescribed by law which a court of competent jurisdiction may deem applicable hereto, then, ipso facto, the obligations to be fulfilled will be reduced to an amount computed at the highest rate of interest permissible under applicable law. If for any reason whatsoever, Holder will ever receive as interest an amount which would be deemed unlawful under such applicable law, the amount will be automatically applied to the payment of principal under this Note (whether or not then due and payable) and not to the payment of interest, or will be refunded to Payor if such principal and all other obligations of Payor to Holder have been paid in full. Payor: MICROFIELD GRAPHICS, INC. By: /s/ Steve Wright ------------------------ Its: CEO/President ------------------------ 5 -----END PRIVACY-ENHANCED MESSAGE-----