<PAGE>
EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
BY
AND AMONG
MICROFIELD GROUP, INC.
AND
CPS ACQUISITION CO.
AND
CHRISTENSON ELECTRIC, INC.
AND
CEAC, INC.
DATED AS OF JULY 20, 2005
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS.........................................................
1
ARTICLE 2 THE
MERGER..........................................................
5
2.1 THE
MERGER.............................................................
5
2.2 EFFECTIVE
TIME.........................................................
5
2.3 ARTICLES
OF INCORPORATION OF SURVIVING CORPORATION.....................
5
2.4 BYLAWS OF
SURVIVING CORPORATION........................................
5
2.5 DIRECTORS
AND OFFICERS OF SURVIVING CORPORATION........................
5
2.6 CONVERSION
OF CPS STOCK................................................
6
2.7
INDEMNIFICATION
ESCROW.................................................
6
2.8 PROCEDURE
FOR PAYMENT..................................................
6
2.9
UNREGISTERED
SHARES....................................................
7
2.10 STOCK
CERTIFICATE LEGENDS..............................................
7
2.11 APPOINTMENT OF
REPRESENTATIVE..........................................
7
2.12 REGISTRATION
RIGHTS....................................................
7
2.13 DISTRIBUTION OF
SHARES.................................................
8
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF CPS AND CPS
SHAREHOLDER...........
8
3.1
ORGANIZATION...........................................................
8
3.2
CAPITALIZATION.........................................................
8
3.3
SUBSIDIARIES...........................................................
8
3.4
AUTHORIZATION; BINDING
AGREEMENT.......................................
8
3.5
GOVERNMENTAL
APPROVALS.................................................
9
3.6 NO
VIOLATIONS..........................................................
9
3.7 CPS
FINANCIAL STATEMENTS...............................................
9
3.8 ABSENCE OF
CERTAIN CHANGES OR EVENTS...................................
9
3.9 NO
UNDISCLOSED
LIABILITIES.............................................
10
3.10 COMPLIANCE WITH
LAWS...................................................
10
3.11
PERMITS................................................................
10
3.12
LITIGATION.............................................................
10
3.13
CONTRACTS..............................................................
10
3.14 EMPLOYEE BENEFIT
PLANS.................................................
11
3.15 TAXES AND TAX
RETURNS..................................................
13
3.16 INTELLECTUAL
PROPERTY..................................................
14
3.17 EMPLOYEE AND
LABOR MATTERS.............................................
15
3.18 LIMITATION ON
BUSINESS CONDUCT.........................................
15
3.19 TITLE TO
PROPERTY......................................................
15
3.20 OWNED AND LEASED
PREMISES..............................................
16
3.21 ENVIRONMENTAL
MATTERS..................................................
16
3.22
INSURANCE..............................................................
17
3.23 PRODUCT
LIABILITY AND RECALLS..........................................
17
3.24
CUSTOMERS..............................................................
17
3.25 INTERESTED PARTY
TRANSACTIONS..........................................
18
3.26 FULL
DISCLOSURE........................................................
18
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF MICROFIELD AND MERGER
SUB.........
18
4.1
ORGANIZATION AND GOOD
STANDING.........................................
18
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4.2
CAPITALIZATION.........................................................
18
4.3
SUBSIDIARIES...........................................................
18
4.4
AUTHORIZATION; BINDING
AGREEMENT.......................................
18
4.5
GOVERNMENTAL
APPROVALS.................................................
19
4.6 NO
VIOLATIONS..........................................................
19
4.7
LITIGATION.............................................................
19
4.8 SEC
REPORTS AND FINANCIAL STATEMENTS...................................
19
4.9 NO
UNDISCLOSED
LIABILITIES.............................................
20
4.10 TAXES AND TAX
RETURNS..................................................
20
4.11 COMPLIANCE WITH
LAWS...................................................
20
4.12 FULL
DISCLOSURE........................................................
20
4.13 NO PRIOR
ACTIVITIES....................................................
21
ARTICLE 5 ADDITIONAL
COVENANTS OF CPS.........................................
21
5.1 CONDUCT OF
BUSINESS OF CPS.............................................
21
5.2
NOTIFICATION OF CERTAIN
MATTERS........................................
22
5.3 ACCESS AND
INFORMATION.................................................
23
5.4
SHAREHOLDER
APPROVAL...................................................
23
5.5 REASONABLE
BEST EFFORTS................................................
23
5.6 PUBLIC
ANNOUNCEMENTS...................................................
23
5.7
COMPLIANCE.............................................................
23
5.8 CPS
SHAREHOLDER APPROVAL...............................................
23
ARTICLE 6 ADDITIONAL
COVENANTS OF MICROFIELD AND MERGER SUB...................
24
6.1 CONDUCT OF
BUSINESS OF MICROFIELD......................................
24
6.2
NOTIFICATION OF CERTAIN
MATTERS........................................
26
6.3 ACCESS AND
INFORMATION.................................................
26
6.4 REASONABLE
BEST EFFORTS................................................
26
6.5 PUBLIC
ANNOUNCEMENTS...................................................
27
6.6
COMPLIANCE.............................................................
27
ARTICLE 7 SURVIVAL;
INDEMNIFICATION...........................................
27
7.1
SURVIVAL...............................................................
27
7.2
INDEMNIFICATION BY THE CPS
SHAREHOLDER.................................
27
7.3
INDEMNIFICATION BY
MICROFIELD..........................................
27
7.4 LIMITS ON
INDEMNIFICATION..............................................
28
7.5
INDEMNIFICATION
PROCEDURE..............................................
29
7.6 PAYMENT
WITH MICROFIELD COMMON STOCK...................................
30
ARTICLE 8 CONDITIONS
PRECEDENT................................................
31
8.1 MERGER
CONDITIONS......................................................
31
8.2 CONDITIONS
PRECEDENT TO THE OBLIGATIONS OF MICROFIELD AND MERGER SUB...
31
8.3 CONDITIONS
PRECEDENT TO THE OBLIGATIONS OF CPS.........................
32
ARTICLE 9
TERMINATION AND
ABANDONMENT.........................................
33
9.1
TERMINATION............................................................
33
9.2 EFFECT OF
TERMINATION AND ABANDONMENT..................................
34
ARTICLE 10
MISCELLANEOUS....................................................
34
10.1
CONFIDENTIALITY........................................................
34
10.2 AMENDMENT AND
MODIFICATION.............................................
35
10.3 WAIVER OF
COMPLIANCE; CONSENTS.........................................
35
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10.4
SURVIVAL...............................................................
35
10.5
NOTICES................................................................
35
10.6 BINDING EFFECT;
ASSIGNMENT.............................................
36
10.7 FEES AND
EXPENSES......................................................
36
10.8 GOVERNING
LAW..........................................................
36
10.9
COUNTERPARTS...........................................................
36
10.10
INTERPRETATION......................................................
36
10.11
ENTIRE
AGREEMENT....................................................
37
10.12
SEVERABILITY........................................................
37
10.13
SPECIFIC
PERFORMANCE................................................
37
10.14
THIRD
PARTIES.......................................................
37
10.15
DISCLOSURE
SCHEDULES................................................
37
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3 - TABLE OF CONTENTS
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AGREEMENT AND PLAN OF MERGER
THIS
AGREEMENT AND PLAN OF MERGER is made as of July 20, 2005 by and
among
MICROFIELD GROUP, INC., an Oregon
corporation, CPS ACQUISITION CO., an Oregon
corporation, CHRISTENSON ELECTRIC, INC., an
Oregon corporation, and CEAC, INC.,
an Oregon corporation.
RECITALS
A. The
respective boards of directors of Microfield, Merger Sub and
CPS
have: (a) determined that the Merger of
Merger Sub with and into CPS pursuant
and subject to all of the terms and
conditions of this Agreement is advisable,
fair and in the best interests of
Microfield, CPS and Merger Sub and their
respective shareholders; and (b) approved
the Merger, this Agreement and the
transactions contemplated by this
Agreement.
B. The
board of directors of Microfield has authorized the issuance of
Microfield Common Stock pursuant to this
Agreement.
C.
Microfield, CPS and Merger Sub desire to make certain
representations,
warranties, covenants and agreements in
connection with the Merger.
D. The
parties intend that the structure of the Merger described in
this
Agreement be a tax-free reorganization
within the meaning of Section 368(a) of
the Code.
NOW,
THEREFORE, in consideration of the covenants, conditions and
agreements set forth herein and for other
good and valuable consideration, the
sufficiency of which are acknowledged, the
parties agree as follows:
ARTICLE 1
DEFINITIONS
When used
in this Agreement, the following terms shall have the meanings
specified:
"AGREEMENT" means this Agreement and Plan of Merger, together with
the
attached Exhibits and Disclosure Schedules,
as the same may be amended from time
to time in accordance with the terms
hereof.
"ARTICLES
OF MERGER" means Articles of Merger in a form approved for
filing in accordance with the OBCA.
"CLOSING"
means the conference to be held at 10:00 a.m. on the Closing
Date at the offices of Microfield, or such
other time and place as the parties
may mutually agree to in writing.
"CLOSING
DATE" means July 20, 2005, or such other date as the parties
may
mutually agree in writing.
Page 1 of 45 - AGREEMENT AND PLAN OF
MERGER
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"CODE"
means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder, as the
same may be in effect from time to
time.
"CPS"
means Christenson Electric, Inc., an Oregon corporation.
"CPS
SHAREHOLDER" means the sole shareholder of CPS immediately prior
to
the Effective Time, namely CEAC, Inc., an
Oregon corporation.
"CPS
STOCK" means shares of common stock, without par value, of CPS.
"DISCLOSURE SCHEDULES" means the Disclosure Schedules attached to
this
Agreement.
"EFFECTIVE
TIME" means the date and time when the Merger becomes effective
pursuant to the OBCA.
"ENFORCEABILITY EXCEPTIONS" means the limits with respect to
the
enforceability of any agreement imposed by
applicable bankruptcy, insolvency,
reorganization or other similar laws
affecting the enforcement of creditors'
rights generally and by principles of
equity regarding the availability of
remedies.
"ESCROW
AGENT" means the escrow agent appointed in the Indemnification
Escrow Agreement.
"ESCROWED
SHARES" means the Microfield Common Stock placed in the
Indemnification Escrow pursuant to Section
2.7.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state
or
other political subdivision thereof or any
entity, authority or body exercising
executive, legislative, judicial or
regulatory functions of or pertaining to
government, including, without limitation,
any governmental or regulatory
authority, agency, department, board,
commission or instrumentality, any court,
tribunal or arbitrator and any
self-regulatory organization.
"INDEMNIFICATION ESCROW" means the Escrow Account opened for the
purpose
of holding the Microfield Common Stock held
back pursuant to Section 2.7.
"KNOWLEDGE" with respect to a party, means the actual current
knowledge of
the existence or nonexistence of a fact or
matter, after reasonable inquiry, by
the executive officers or directors of
Microfield or CPS, as applicable, taking
into consideration the type of knowledge
that the person would know by virtue of
such person's position.
"LAW"
means any federal, state, local or other law, rule, regulation
or
governmental requirement of any kind, and
the rules, regulations and orders
promulgated thereunder by any regulatory
agencies.
"LIEN"
means (a) any mortgage, pledge, lien, covenant, lease, security
interest or encumbrance of any kind and (b)
with respect to any asset, the
interest of a vendor or lessor under any
conditional sale agreement, financing
lease or other title retention agreement
relating to such asset.
Page 2 of 45 - AGREEMENT AND PLAN OF
MERGER
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"MATERIAL
ADVERSE CHANGE" means any materially adverse change in the
financial condition, properties, business
or results of operations of a party
that exceeds the sum of $50,000 or more,
whether taken separately or together in
the aggregate with other similar events,
other than changes arising out of
general economic conditions unrelated to
the business in which the party is
engaged.
"MATERIAL
ADVERSE EFFECT" means any event, condition or fact that is, or
reasonably may be expected to be,
materially adverse to the financial condition,
properties, business, results of operations
or prospects of a party that exceeds
the sum of $50,000 or more, whether taken
separately or together in the
aggregate with other similar events, other
than events, conditions or facts
arising out of general economic conditions
unrelated to the business in which
the party is engaged.
"MATERIAL
CONTRACTS" means any agreement or contract to which a party, or
by which its properties or assets, is
bound, which reasonably could result in a
Material Adverse Change or have a Material
Adverse Effect, including, but not
limited, to: (a) all loan agreements,
indentures, mortgages, pledges,
conditional sale or title retention
agreements, security agreements, guaranties,
standby letters of credit, equipment leases
or lease purchase agreements, each
in an amount exceeding $50,000; or (b) all
contracts, agreements, commitments or
other understandings or arrangements, but
excluding contracts, agreements,
commitments or other understandings or
arrangements entered into in the ordinary
course of business and involving individual
payments or receipts by the party of
less than $50,000 over the term of such
contract, agreement, commitment or other
understanding or arrangement.
"MERGER"
means the merger of Merger Sub with and into CPS pursuant to
this
Agreement and the OBCA.
"MERGER
CONSIDERATION" means the aggregate number of shares of
Microfield
Common Stock issuable to the CPS
Shareholders pursuant to Section 2.6, subject
to any rounding for fractional shares
pursuant to Section 2.8(b).
"MERGER
SUB" means CPS Acquisition Co., an Oregon corporation and a
wholly
owned Subsidiary of Microfield.
"MICROFIELD" means Microfield Group, Inc., an Oregon
corporation.
"MICROFIELD COMMON STOCK" means shares of common stock, no par
value, of
Microfield.
"MICROFIELD STOCK VALUE" means the average bid price as reported on
the
OTCBB or NASDAQ or other exchange upon
which Microfield Common Stock is trading
for the thirty (30) days immediately prior
to and including the last trading day
prior to the applicable date for which the
value is determined.
"OBCA"
means the Oregon Business Corporation Act, as the same shall be
in
effect from time to time.
Page 3 of 45 - AGREEMENT AND PLAN OF
MERGER
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"PERMITS"
means all permits, licenses, approvals, qualifications,
governmental authorizations, registrations
and franchises that CPS has or holds,
all of which are listed and briefly
described in the Disclosure Schedules.
"PERSON"
means a natural person, corporation, trust, partnership,
limited
liability company, governmental entity,
agency or branch or department thereof,
or any other legal entity.
"REPRESENTATIVE" means Robert J. Jesenik, or his successor as
appointed by
the board of directors of CEAC, Inc. or its
successor, who shall act as
representative of the CPS Shareholder under
the Agreement.
"SUBSIDIARY" means any entity (a) at least a majority of the
outstanding
capital stock or ownership interest of
which shall at the time be owned by
Microfield or CPS, as applicable, directly
or through one (1) or more entities
that are themselves Subsidiaries or (b)
with respect to which Microfield or CPS,
as applicable, may elect a majority of the
board of directors or similar
governing body.
"SURVIVING
CORPORATION" means CPS, which shall survive the Merger of
Merger Sub with and into CPS.
OTHER
TERMS. The following terms shall have the meanings specified in
the
following noted sections of this
Agreement:
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TERM
SECTION
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Balance Sheet
3.9
Consent
3.5
Conversion Ratio
2.6
Damages
7.2
Employee Plans
3.14(a)
Environmental Claim
3.21(e)(i)
Environmental Laws
3.21(e)(ii)
ERISA
3.14(a)
ERISA Affiliate
3.14(a)
Indemnification Escrow Agreement
2.7
Intellectual Property Rights
3.16(b)
IRS
3.14(b)
ISO
3.14(c)
Litigation
3.12
Material of Environmental Concern
3.21(e)(iii)
Microfield Financial Statements
4.9
Microfield Indemnified Persons
7.2
Microfield SEC Reports
4.8
Preferred Shares
4.2
Related Documents
7.1
Rule 144
2.9
Securities Act
2.9
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MERGER
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Tax
3.15(b)
Tax Returns
3.15(b)
Third Party Claims
7.5(a)(i)
CPS Balance Sheet
3.9
CPS Financial Statements
3.7
CPS Indemnified Persons
7.3
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ARTICLE 2 THE MERGER
2.1 THE
MERGER. At the Effective Time and upon and subject to the terms
and conditions of this Agreement, Merger
Sub will be merged with and into CPS.
CPS shall be the Surviving Corporation in
the Merger and shall continue to be
governed by the Laws of the State of
Oregon, and the separate existence of
Merger Sub shall cease. The Merger shall be
pursuant to the provisions of, and
shall be with the effects provided in, the
OBCA.
2.2
EFFECTIVE TIME. Subject to the terms and conditions of this
Agreement,
on the Closing Date, Merger Sub and CPS
will cause the Articles of Merger to be
executed, delivered and filed as provided
in the OBCA. The Merger shall become
effective at the time of the filing of the
Articles of Merger with the Oregon
Secretary of State, Corporation Division,
or at such later time as Microfield
and CPS may agree and as may be set forth
in the Articles of Merger.
2.3
ARTICLES OF INCORPORATION OF SURVIVING CORPORATION. The Articles
of
Incorporation of Merger Sub in effect
immediately prior to the Effective Time
shall be the Articles of Incorporation of
the Surviving Corporation until
amended in accordance with the OBCA.
2.4 BYLAWS
OF SURVIVING CORPORATION. The Bylaws of Merger Sub in effect
immediately prior to the Effective Time
shall be the Bylaws of the Surviving
Corporation until amended in accordance
with the OBCA.
2.5
DIRECTORS AND OFFICERS OF SURVIVING CORPORATION. The board of
directors of the Surviving Corporation
shall initially consist of five (5)
director positions. The following directors
are hereby elected and shall serve
as the directors of the Surviving
Corporation to hold office as provided in the
Bylaws:
William C. McCormick
Robert J. Jesenik
Steven M. Wright
A. Mark Walter
Michael Stansell
The
following officers shall be the officers of the Surviving
Corporation,
to hold office as provided in the
Bylaws:
A. Mark Walter
President
Larry L. Sevy
Chief Operating Officer -- Power Services
Michael Stansell
Secretary
Page 5 of 45 - AGREEMENT AND PLAN OF
MERGER
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2.6
CONVERSION OF CPS STOCK. At the Effective Time, by virtue of
the
Merger and without any action on the part
of Merger Sub, CPS or Microfield, the
CPS Shareholder of record immediately prior
to the Effective Time shall be
entitled to receive a total of 2,000,000
shares of Microfield Common Stock in
exchange for all of the CPS Stock
outstanding. The CPS Shareholder will receive
the following shares of Microfield Common
Stock:
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CPS STOCK
TOTAL CONVERTED
ESCROWED
CPS SHAREHOLDER
OWNED
SHARES
SHARES
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CEAC, INC.
100
2,000,000
2,000,000
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The
Escrowed Shares will be placed in the Indemnification Escrow as
provided for in Section 2.7.
2.7
INDEMNIFICATION ESCROW. At the Effective Time, the CPS
Shareholder,
Microfield and the Escrow Agent shall enter
into an Indemnification Escrow
Agreement in the form attached as Exhibit A
("INDEMNIFICATION ESCROW
AGREEMENT"). The Indemnification Escrow
Agreement will require that
simultaneously with the Effective Time the
CPS Shareholder will place 2,000,000
shares of Microfield Common Stock into an
escrow account for the purposes of
satisfying claims arising under this
Agreement. The Indemnification Escrow
Agreement shall also provide the manner and
method upon which claims will be
satisfied by the Microfield Common Stock
placed in escrow.
2.8
PROCEDURE FOR PAYMENT.
(a) SURRENDER OF STOCK. From and after the Effective Time, the
CPS
Shareholder of record immediately prior to
the Effective Time, upon surrender to
Microfield or its agent designated for such
purpose of any letters of
transmittal or other documents as may be
reasonably requested by Microfield or
its agent, shall be entitled to receive one
or more certificates representing
the number of shares of Microfield Common
Stock into which such CPS Stock shall
have been converted pursuant to the
provisions of Section 2.6; provided,
however, that a certificate representing
the escrowed shares described in
Section 2.7 shall be delivered to the
escrow agent and held pursuant to the
Indemnification Escrow Agreement.
(b) NO FRACTIONAL SHARES. No certificates or scrip evidencing
fractional shares of Microfield Common
Stock shall be issued in the Merger, and
such fractional share interests will not
entitle the owner thereof to any rights
as a shareholder of Microfield. Merger
Consideration to be paid to the CPS
Shareholder will be rounded to the nearest
whole share.
(c) NO FURTHER RIGHTS IN CPS STOCK. All shares of Microfield
Common
Stock issued upon conversion of the CPS
Stock in accordance with the terms of
this Agreement shall be deemed to have been
issued (and paid) in full
satisfaction of all rights of the CPS
Shareholder pertaining to the CPS Stock.
Following the Effective Time, the CPS
Shareholder shall cease to have any rights
with respect to such CPS Stock except as
otherwise provided in this Agreement or
by law.
Page 6 of 45 - AGREEMENT AND PLAN OF
MERGER
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2.9
UNREGISTERED SHARES. The CPS Shareholder has been informed by
Microfield that the Microfield Common Stock
conveyed hereunder as Merger
Consideration has not been registered under
the Securities Act of 1933 (the
"SECURITIES ACT") and that such Microfield
Common Stock must be held for the
time required by Rule 144 promulgated under
the Securities Act ("RULE 144"),
unless (a) the sale of the Microfield
Common Stock has been registered under the
Securities Act, (b) a sale of the
Microfield Common Stock is made in conformity
with the provisions of Rule 144, or (c) in
the opinion of counsel for the CPS
Shareholder, which opinion is reasonably
acceptable to Microfield, some other
exemption from registration is available
with respect to any such sale, transfer
or other disposition of such Microfield
Common Stock.
2.10 STOCK
CERTIFICATE LEGENDS. The CPS Shareholder acknowledges and
understands that stock transfer
instructions will be given to Microfield's
transfer agent with respect to the Merger
Consideration and that there will be
placed on the certificates for such shares,
or any substitution therefor, the
following legend:
"The securities evidenced by this certificate have not been
registered under the Securities Act of 1933 (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) to the effect
that
such transaction is exempt from registration or the Company
otherwise satisfies itself that such transaction is exempt from
registration."
2.11
APPOINTMENT OF REPRESENTATIVE. The Representative is hereby
appointed
as representative of the CPS Shareholder
for purposes of this Agreement. The CPS
Shareholder's approval of this Agreement
shall include confirmation of the
authority of the Representative.
2.12
REGISTRATION RIGHTS. The CPS Shareholder will receive the
following
registration rights as set forth more
specifically in the Registration Rights
Agreement attached hereto as Exhibit B:
(a) For a period of five (5) years following the Closing Date,
unlimited piggyback registration rights for
all shares owned by the CPS
Shareholder;
(b) If during the two (2) years following the Closing Date,
piggyback registration rights become
available to the CPS Shareholder, but the
CPS Shareholder is unable to register fifty
percent (50%) or more of the CPS
Shareholder's Microfield Common Stock that
such shareholder then elects to
register at the date the piggyback
registration rights become available, in
spite of the CPS Shareholder's election to
register the shares through the
piggyback rights registration, then,
subject to the other conditions of this
Section 2.12, the CPS Shareholder will have
two (2) demand registration rights
as to those shares remaining unregistered
contrary to the CPS Shareholder's
election on the date the piggyback
registration rights become effective. Such
Demand Registration Rights shall be
available beginning two (2) years after the
Closing
Page 7 of 45 - AGREEMENT AND PLAN OF
MERGER
<PAGE>
Date and ending five (5) years after the
Closing Date. Such demand registration
rights shall apply only to stock not
registered contrary to the election of the
CPS Shareholder to exercise its piggyback
registration rights and may be
exercised if the registration is intended
to result in aggregate gross proceeds
of the offering, net of underwriting
expenses, of at least Five Hundred Thousand
Dollars ($500,000.00).
2.13
DISTRIBUTION OF SHARES. At the Effective Time, and in connection
with
the Merger, CPS will distribute and
transfer to the CPS Shareholder the
following shares of Microfield preferred
stock which are now held by CPS
(subject to any existing pledge, lien or
encumbrance): (a) 4,202,381 Series 2
Preferred; and (b) 125.636 Series 3
Preferred.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF CPS AND CPS SHAREHOLDER
CPS and
the CPS Shareholder represent and warrant to Microfield and
Merger
Sub that, except as set forth in the
correspondingly numbered sections of the
Disclosure Schedules:
3.1
ORGANIZATION. CPS is a corporation duly organized and validly
existing
under the laws of the jurisdiction of its
incorporation and has all requisite
corporate power and authority to own, lease
and operate its properties and to
carry on its business as now being
conducted. CPS is duly qualified or licensed
and in good standing to do business in each
jurisdiction in which the character
of the property owned, leased or operated
by it or the nature of the business
conducted by it makes such qualification or
licensing necessary, except where
the failure to be so duly qualified or
licensed and in good standing would not
reasonably be expected to have a Material
Adverse Effect. CPS has delivered to
Microfield accurate and complete copies of
its Articles of Incorporation and
Bylaws, as currently in effect.
3.2
CAPITALIZATION. As of the Date of Closing, the CPS Stock and
the
holders thereof are as set forth in Section
3.2 of the Disclosure Schedules. As
of the Closing Date, all issued and
outstanding CPS Stock will be duly
authorized, validly issued, fully paid and
non-assessable. Section 3.2 of the
Disclosure Schedules sets forth the name of
the holder and the exercise price of
all options and warrants to purchase CPS
Stock. Except as disclosed in Section
3.2 of the Disclosure Schedules, there are
no outstanding rights, subscriptions,
warrants, puts, calls, unsatisfied
preemptive rights, options or other
agreements of any kind relating to any of
the outstanding or unissued CPS Stock
or any other security of CPS, and there is
no authorized or outstanding security
of any kind convertible into or
exchangeable for any CPS Stock or other
security. There are no obligations,
contingent or otherwise, of CPS to
repurchase, redeem or otherwise acquire any
CPS Stock or to provide funds to or
otherwise make any investment (in the form
of a loan, capital contribution or
other similar investment) in any other
entity.
3.3
SUBSIDIARIES. CPS has no Subsidiaries except as disclosed in
Section
3.3 of the Disclosure Schedules.
3.4
AUTHORIZATION; BINDING AGREEMENT. CPS has all requisite
corporate
power and authority to execute and deliver
this Agreement and to complete the
transactions contemplated hereby. The
execution and delivery of this Agreement
and the completion of the transactions
contemplated hereby, including, but not
limited to, the Merger, have been duly and
validly authorized by CPS's board of
directors, and no other corporate
proceedings on the part of CPS are necessary
to authorize the execution and delivery of
this Agreement or to complete the
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transactions contemplated hereby (other
than adoption of this Agreement by the
CPS Shareholder in accordance with the OBCA
and the Articles of Incorporation
and Bylaws of CPS). This Agreement has been
duly and validly executed and
delivered by CPS and constitutes the legal,
valid and binding agreement of CPS,
enforceable against CPS in accordance with
its terms, except to the extent that
enforceability thereof may be limited by
the Enforceability Exceptions.
3.5
GOVERNMENTAL APPROVALS. No consent, approval, waiver or
authorization
of, notice to or declaration or filing with
("CONSENT") any Governmental
Authority, on the part of CPS is required
in connection with the execution or
delivery by CPS of this Agreement or the
completion by CPS of the transactions
contemplated hereby other than (a) the
filing of the Articles of Merger with the
Secretary of State of Oregon, Corporation
Division, in accordance with the OBCA,
and (b) those Consents that, if they were
not obtained or made, would not
reasonably be expected to have a Material
Adverse Effect.
3.6 NO
VIOLATIONS. Except as disclosed in Section 3.6 of the
Disclosure
Schedules, the execution and delivery of
this Agreement, the completion of the
transactions contemplated hereby and
compliance by CPS with any of the
provisions hereof will not (a) conflict
with or result in any breach of any
provision of the Articles of Incorporation
or Bylaws of CPS, (b) require any
Consent under or result in a violation or
breach of, or constitute (with or
without notice or lapse of time or both) a
default (or give rise to any right of
termination, cancellation or acceleration)
under any of the terms, conditions or
provisions of, any Material Contract, (c)
result in the creation or imposition
of any Lien upon any of the assets of CPS
or (d) subject to obtaining the
Consents from Governmental Authorities
referred to in Section 3.5, violate any
applicable provision of any Law to which
CPS or its assets or properties are
subject, except, in the case of each of
clauses (b), (c) and (d) above, for any
deviations from the foregoing that would
not reasonably be expected to have a
Material Adverse Effect.
3.7 CPS
FINANCIAL STATEMENTS. CPS has delivered to Microfield the
financial statements for the years ending
October 31, 1999, 2000, 2001, 2002,
2003 and 2004, and for the seven (7) months
ended May 31, 2005 (the "CPS
FINANCIAL STATEMENTS"). The CPS Financial
Statements have been prepared in
accordance with generally accepted
accounting principles consistently applied,
and they present fairly, in all material
respects, the financial position of CPS
as at the dates thereof and the results of
its operations and cash flows for the
periods then ended, subject to any
adjustments described therein, except that
(a) unaudited financial statements do not
contain footnotes, and (b) interim
period statements are subject to such
adjustments as would normally be contained
in such footnotes and are subject to normal
year end adjustments.
3.8
ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Section
3.8 of the Disclosure Schedules, from the
date of issuance of the 2004 CPS
Financial Statements through the date of
this Agreement, there has not been: (a)
to the Knowledge of CPS, any event that has
had or would reasonably be expected
to have a Material Adverse Effect; (b) any
declaration, payment or setting aside
for payment of any dividend or other
distribution or any redemption or other
acquisition of any stock or securities of
CPS by CPS; (c) any material damage or
loss to any material asset or property,
whether or not covered by insurance; (d)
any change by CPS in accounting principles
or practices; (e) any material
revaluation by CPS of any of its assets,
including writing down the value of
inventory or writing off notes or accounts
receivable other
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than in the ordinary course of business;
(f) any sale of a material amount of
property of CPS, except in the ordinary
course of business; (g) any payments to
CPS employees or service providers outside
of CPS's regular course of business;
or (h) any other action or event, involving
an amount exceeding $5,000 that
would have required the consent of
Microfield pursuant to Section 5.1 had such
action or event occurred after the date of
this Agreement.
3.9 NO
UNDISCLOSED LIABILITIES. Except as set forth in Section 3.9 of
the
Disclosure Schedules, CPS has no
liabilities (absolute, accrued, contingent or
other), except liabilities (a) adequately
provided for in the 2004 CPS Financial
Statements; or (b) incurred in the ordinary
course of business on or before the
dates of the 2004 CPS Financial Statements
and not required under GAAP to be
reflected on the Balance Sheet; or (c)
incurred since the issuing of the 2004
CPS Financial Statements in the ordinary
course of business consistent with past
practice; or (d) incurred in connection
with this Agreement; or (e) that would
reasonably be expected not to have a
Material Adverse Effect. Subject to the
foregoing exceptions, Section 3.9 of the
Disclosure Schedule is a list of all of
the outstanding liabilities of CPS greater
than $20,000 as of the date of this
Agreement. Except as otherwise provided in
this Section 3.9 or disclosed in
Section 3.9 of the Disclosure Schedules,
CPS has no debt or liabilities owed to
any creditor, excluding current trade
payables and accrued expenses incurred in
the ordinary course of business.
3.10
COMPLIANCE WITH LAWS. The business of CPS has been operated in
compliance with all Laws applicable
thereto, except for any non-compliance that
would reasonably be expected not to have a
Material Adverse Effect.
3.11
PERMITS. Section 3.11 of the Disclosure Schedules contains a
complete
and accurate list of each material Permit
that is held by CPS or that otherwise
relates to the business of, or to any of
the assets owned or used by, CPS. Each
Permit is valid and in full force and
effect. Except as set forth in Section
3.11 of the Disclosure Schedules, (a) CPS
has all Permits required in connection
with the operation of its business, (b) CPS
is not in violation of any Permit
and (c) no proceedings are pending or, to
the Knowledge of CPS, threatened, to
revoke or limit any Permit, except, in the
case of each of clauses (a) and (b),
where the absence or violation would not
reasonably be expected to have a
Material Adverse Effect.
3.12
LITIGATION. Except as set forth in Section 3.12 of the
Disclosure
Schedules, there is no suit, action or
proceeding ("LITIGATION") pending or, to
the Knowledge of CPS, threatened against
CPS, nor is there any judgment, decree,
injunction, rule or order of any
Governmental Authority outstanding against CPS
that would reasonably be expected to have a
Material Adverse Effect.
3.13
CONTRACTS. Section 3.13 of the Disclosure Schedules sets forth, as
of
the date hereof, a list of Material
Contracts to which CPS is a party or by
which its properties or assets are bound
that are outside the ordinary course of
the business of CPS. CPS is not a party to
any agreements to acquire in the
future the capital stock or substantially
all the assets of another Person.
Except as disclosed in Section 3.13 of the
Disclosure Schedules, to the
Knowledge of CPS all the Material Contracts
are valid and binding and are in
full force and effect and enforceable
against CPS in accordance with their
respective terms, subject to the
Enforceability Exceptions, and CPS is not in
violation or breach of or default under any
Material Contract, except where the
failure to be in full force and effect or
where such violation or breach would
not
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<PAGE>
reasonably be expected to have a Material
Adverse Effect. To the Knowledge of
CPS, no party is in default, violation or
breach of any Material Contract where
such violation or breach would reasonably
be expected to have a Material Adverse
Effect.
3.14
EMPLOYEE BENEFIT PLANS.
(a) Section 3.14(a) of the Disclosure Schedules lists all
employee
pension benefit plans (as defined in
Section 3(2) of the Employee Retirement
Income Security Act of 1974 ("ERISA")), all
employee welfare benefit plans (as
defined in Section 3(1) of ERISA) and all
other bonus, option, membership
purchase, incentive, deferred compensation,
supplemental retirement, severance
and other similar fringe or employee
benefit plans, programs or arrangements,
and any employment, executive compensation
or severance agreements, written or
otherwise, as amended, modified or
supplemented, for the benefit of, or relating
to, any former or current employee, officer
or consultant who is an individual
or an individual doing business in a
corporate form (or any of their
beneficiaries) of CPS or any other entity
(whether or not incorporated) or which
is under common control (an "ERISA
AFFILIATE") within the meaning of Section
414(b), (c), (m) or (o) of the Code or
Section 4001(a)(14) or (b) of ERISA, or
any CPS Subsidiary, with respect to which
CPS has or could have any current
(actual or contingent) material liability
(together for purposes of this Section
3.14 "EMPLOYEE PLANS"). Prior to the date
of this Agreement, CPS has provided or
made available to Microfield, or Microfield
has had previous access to, copies
of (i) each such written Employee Plan (or
a written description of any Employee
Plan which is not written) and all related
trust agreements, insurance and other
contracts (including policies), summary
plan descriptions, summaries of material
modifications and any material
communications to plan participants, (ii) the
three (3) most recent annual reports on
Form 5500 series, with accompanying
schedules and attachments, filed with
respect to each Employee Plan required to
make such a filing, and (iii) the most
recent favorable determination letters
issued for each Employee Plan and related
trust which is intended to qualify
under Section 401(a) of the Code (and, if
an application for such determination
is pending, a copy of the application for
such determination).
(b) (i) None of the Employee Plans promises or provides retiree
medical or other retiree welfare benefits
to any Person (other than in
accordance with Section 4980B of the Code
or Part 6 of Subtitle B of Title I of
ERISA and none of the Employee Plans is
subject to Title IV of ERISA or Section
412 of the Code); (ii) neither CPS nor any
ERISA Affiliate has ever contributed
to a "MULTI-EMPLOYER PLAN" as such term is
defined in Section 3(37) of ERISA;
(iii) to the Knowledge of CPS, no "PARTY IN
INTEREST" or "DISQUALIFIED PERSON"
(as defined in Section 3(14) of ERISA and
Section 4975 of the Code) has at any
time engaged in a transaction with respect
to any Employee Plan that could
subject CPS or any ERISA Affiliate,
directly or indirectly, to a tax, penalty or
other liability for prohibited transactions
under ERISA or Section 4975 of the
Code, except for any such tax, penalty or
liability that would not reasonably be
expected to result in a Material Adverse
Effect; (iv) to the Knowledge of CPS,
no fiduciary of any Employee Plan has
breached any of the responsibilities or
obligations imposed upon fiduciaries under
Title I of ERISA, except where such
breach would not reasonably be expected to
result in a Material Adverse Effect;
(v) all Employee Plans have been
established and maintained substantially in
accordance with their terms and have
operated in compliance with the
requirements prescribed by any and all
statutes (including ERISA and the Code),
orders, or governmental rules and
regulations currently in effect with respect
thereto (including all
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applicable requirements for notification to
participants or the Department of
Labor, the Internal Revenue Service (the
"IRS") or the Secretary of the
Treasury), except where failure to do so
would not reasonably be expected to
result in a Material Adverse Effect; and
CPS and each CPS Subsidiary have
performed all obligations required to be
performed by them under, are not in
default under or in violation of any
Employee Plan except where failure to do so
would not reasonably be expected to result
in a Material Adverse Effect, and
have no Knowledge of any default or
violation by any other party to, any of the
Employee Plans; (vi) each Employee Plan
which is intended to be qualified under
Sections 401 and 501 of the Code is the
subject of a favorable determination
letter from the IRS, and to the Knowledge
of CPS nothing has occurred that may
reasonably be expected to impair such
determination; (vii) all contributions
required to be made with respect to any
Employee Plan pursuant to the terms of
the Employee Plan have been made on or
before their due dates, including due
dates with respect to employee deferrals;
and (viii) there are no complaints,
charges or claims against CPS pending or to
CPS's Knowledge threatened to be
brought by or filed with any Governmental
Authority based on, arising out of, in
connection with or otherwise relating to
the classification of any individual by
CPS as an independent contractor or "LEASED
EMPLOYEE" (within the meaning of
Section 414(n) of the Code) rather than as
an employee.
(c) Section 3.14(c) of the Disclosure Schedules sets forth a
true
and complete list of each current or former
employee, officer or director of CPS
or any of its Subsidiaries who holds (i)
any option to purchase CPS Stock as of
the date hereof, together with the number
of shares of CPS Stock subject to such
option, the option price of such option (to
the extent determined as of the date
hereof), whether such option is intended to
qualify as an incentive stock option
within the meaning of Section 422(b) of the
Code (an "ISO"), and the expiration
date of such option; (ii) any CPS Stock
that is restricted as a result of an
agreement with or equity participation plan
of CPS; and (iii) any other right,
directly or indirectly, to receive CPS
Stock, except as otherwise disclosed in
Section 3.14 of the Disclosure Schedules,
together with the percentage of CPS
Stock subject to such right. Section
3.14(c) of the Disclosure Schedules also
sets forth the total number of any such
ISO's and any such nonqualified options
and other such rights.
(d) Unless otherwise disclosed in Section 3.14(a) of the
Disclosure
Schedules, Section 3.14(d) of the
Disclosure Schedules sets forth a true and
complete list of (i) all employment
agreements with officers of CPS or any of
its Subsidiaries; (ii) all agreements with
consultants who are individuals
obligating CPS or any of its Subsidiaries
to make annual cash payments in an
amount exceeding $10,000; (iii) all
agreements that individually or in the
aggregate are or could be material with
respect to the services of independent
contractors or leased employees who are
individuals or individuals doing
business in a corporate form whether or not
they participate in any of the
Employee Plans; (iv) all officers of CPS or
any of its Subsidiaries who have
executed a non-competition agreement with
CPS or any of its Subsidiaries; (v)
all severance agreements, programs and
policies of CPS or any of its
Subsidiaries with or relating to its
employees, in each case with outstanding
commitments exceeding $25,000, excluding
programs and policies required to be
maintained by Law; and (vi) all plans,
programs, agreements and other
arrangements of CPS that contain change in
control provisions.
(e) (i) Except as set forth in Section 3.14(e) of the
Disclosure
Schedules, no Employee Plan is an employee
stock ownership plan (within the
meaning of Section 4975(e)(7)
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of the Code) or otherwise invests in CPS
Stock; and (ii) the completion of the
transactions contemplated by this Agreement
will not result in an increase in
the amount of compensation or benefits or
accelerate the vesting or timing of
payment of any benefits or compensation
payable in respect of any employee
except as disclosed in Section 3.14(e) of
the Disclosure Schedules or except
where such increase or acceleration would
not reasonably be expected to result
in a Material Adverse Effect.
(f) Except as set forth in Section 3.14(f) of the Disclosure
Schedules, CPS maintains no Employee Plan
covering non-U.S. employees.
3.15 TAXES
AND TAX RETURNS.
(a) CPS has timely filed, or caused to be timely filed, all
material
Tax Returns required to be filed by it, and
all such Tax Returns are true,
complete and correct in all material
respects, and has timely paid, collected or
withheld, or caused to be paid, collected
or withheld, all material amounts of
Taxes required to be paid, collected or
withheld, other than such Taxes for
which adequate reserves in CPS Financial
Statements have been established and
which are being contested in good faith and
as identified in Section 3.15 of the
Disclosure Schedules. Except as set forth
in Section 3.15 of the Disclosure
Schedules, there are no material claims or
assessments pending against CPS (or
the CPS Shareholder with respect to CPS)
for any alleged deficiency in any Tax,
and CPS has not been notified in writing of
any proposed Tax claims or
assessments against CPS (or the CPS
Shareholder with respect to CPS) (other than
in each case, claims or assessments for
which adequate reserves in the Financial
Statements have been established and which
are being contested in good faith and
as identified in Section 3.15 of the
Disclosure Schedules or claims or
assessments which are immaterial in
amount). Neither CPS nor the CPS Shareholder
with respect to CPS has executed any
waivers or extensions of any applicable
statute of limitations to assess any
material amount of Taxes. There are no
outstanding requests by CPS (or the CPS
Shareholder with respect to CPS) for any
extension of time within which to file any
material Tax Return or within which
to pay any material amounts of Taxes shown
to be due on any Tax Return. There
are no Liens for material amounts of Taxes
on the assets of CPS (or the CPS
Shareholder with respect to CPS) except for
statutory liens for current Taxes
not yet due and payable. There are no
outstanding powers of attorney enabling
any party to represent CPS (or the CPS
Shareholder with respect to CPS) or any
of its Subsidiaries with respect to Tax
matters.
(b) For purposes of this Agreement, the term "TAX" means any
federal, state, local, foreign or
provincial income, gross receipts, property,
sales, use, license, excise, franchise,
employment, payroll, alternative or
add-on minimum, ad valorem, transfer or
excise tax, or any other tax, custom,
duty, governmental fee or other like
assessment or charge of any kind
whatsoever, together with any interest or
penalty imposed by any Governmental
Authority. The term "TAX RETURN" means a
report, return or other information
(including any attached schedules or any
amendments to such report, return or
other information) supplied to or filed
with or required to be supplied to or
filed with a governmental entity with
respect to any Tax, including an
information return, claim for refund,
amended return or declaration or estimated
Tax.
(c) Except as set forth in Section 3.15 of the Disclosure
Schedules,
(i) CPS has been a corporation for federal
and state income tax purposes at all
times since its inception;
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(ii) CPS has not been included in a
combined, consolidated or unitary Tax Return
except with the CPS Shareholder, and other
than with respect to CPS, CPS is not
currently liable for Taxes of any other
Person, nor is CPS currently under any
contractual obligation to indemnify any
Person with respect to Taxes (except for
customary agreements to indemnify lenders
or security holders in respect of
taxes other than income taxes), nor is CPS
a party to any tax sharing agreement
or any other agreement providing for
payments by CPS with respect to Taxes;
(iii) CPS is not a party to any joint
venture, partnership or other arrangement
or contract that could be treated as a
partnership for federal income tax
purposes; (iv) CPS has not entered into any
sale-leaseback or any leveraged
lease transaction that fails to satisfy the
requirements of Revenue Procedure
75-21 (or similar provisions of foreign
law); (v) CPS has not agreed nor is
required, as a result of a change in method
of accounting or otherwise, to
include any adjustment under Section 481 of
the Code (or any corresponding
provision of state, local or foreign law)
in taxable income; (vi) CPS is not a
party to any agreement, contract,
arrangement or plan that would result (taking
into account the transactions contemplated
by this Agreement), separately or in
the aggregate, in the payment of any
"EXCESS PARACHUTE PAYMENTS" within the
meaning of Section 280G of the Code; (vii)
CPS is not liable with respect to any
indebtedness the interest of which is not
deductible for applicable federal,
foreign, state or local income tax
purposes; (viii) CPS is not a "CONSENTING
CORPORATION" under Section 341(f) of the
Code or any corresponding provision of
state, local or foreign law; (ix) CPS has
complied with all applicable laws,
rules, and regulations relating to the
withholding and payment of Taxes except
where the amount of taxes involved is not
material; and (x) none of the assets
owned by CPS is property that is required
to be treated as owned by any other
Person pursuant to Section 168(g)(8) of the
Internal Revenue Code of 1954, as
amended, as in effect immediately prior to
the enactment of the Tax Reform Act
of 1986, or is "TAX-EXEMPT USE PROPERTY"
within the meaning of Section 168(h) of
the Code.
3.16
INTELLECTUAL PROPERTY.
(a) Section 3.16(a) of the Disclosure Schedules sets forth a list
of
(i) all patents and patent applications
owned by CPS worldwide; (ii) all
trademark and service mark registrations
and all trademark and service mark
applications, material common law
trademarks, material trade dress and material
slogans, and all trade names owned by CPS
worldwide; (iii) all copyright
registrations and copyright applications
owned by CPS worldwide; and (iv) all
licenses in which CPS is (A) a licensor
with respect to any of the patents,
trademarks, service marks, trade names or
copyrights listed in Section 3.16 of
the Disclosure Schedules or (B) a licensee
of any other Person's patents, trade
names, trademarks, service marks or
copyrights except for any licenses of
software programs that are commercially
available "OFF THE SHELF."
(b) To the Knowledge of CPS, CPS owns, or is licensed or
otherwise
possesses legal enforceable rights to use,
all patents, trademarks, trade names,
service marks, trade dress, slogans,
copyrights and any applications therefor,
technology, know-how, trade secrets,
computer software programs or applications,
domain names and tangible or intangible
proprietary information or materials
that are used in the respective businesses
of CPS as currently conducted (the
"INTELLECTUAL PROPERTY RIGHTS"), except for
any such failures to own, be
licensed or possess that would not
reasonably be expected to have a Material
Adverse Effect.
(c) CPS has made all necessary filings and recordations for the
patents, patent applications, trademark and
service mark registrations,
trademark and service mark applications,
copyright registrations and copyright
applications set forth in Section 3.16(a)
of the Disclosure
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Schedules, except where the failure to make
such filings or recordations would
not reasonably be expected to have a
Material Adverse Effect. There are not
currently pending, and to the Knowledge of
CPS there are no valid grounds for,
any bona fide claims (i) that the business
of CPS infringes on any copyright,
patent, trademark, service mark or trade
secret; (ii) against the use by CPS of
any trademarks, trade names, trade secrets,
copyrights, patents, technology,
know-how or computer software programs and
applications used in the business of
CPS as currently conducted or as proposed
to be conducted; (iii) challenging the
exclusive ownership, validity or
effectiveness of any of Intellectual Property
Rights claimed by CPS to be owned
exclusively by it; or (iv) challenging the
license or legally enforceable right to use
of any third-party patents,
trademarks, service marks and copyrights by
CPS, except, in the case of each of
clauses (i), (ii), (iii) and (iv) above,
for matters that, if determined
adversely to CPS, would not reasonably be
expected to have a Material Adverse
Effect.
(d) Except as set forth in Section 3.16 of the Disclosure
Schedules,
to the Knowledge of CPS, there is no
material unauthorized use, infringement or
misappropriation of any of Intellectual
Property Rights by any third party,
including any employee or former employee
of CPS.
(e) Except as set forth in Section 3.16 of the Disclosure
Schedules,
there are no valid royalty agreements,
license agreements (except for any
license implied by the sale or products) or
similar arrangements with respect to
the Intellectual Property.
3.17
EMPLOYEE AND LABOR MATTERS.
(a) Section 3.17(a) of the Disclosure Schedules sets forth a list
of
all employees of CPS.
(b) Except as set forth in Section 3.17 of the Disclosure
Schedules,
(i) there are no controversies pending or,
to the Knowledge of CPS, threatened,
between CPS and any of its employees, which
controversies would reasonably be
expected to have a Material Adverse Effect;
(ii) CPS is not a party to any
collective bargaining agreement or other
labor union contract applicable to
Persons employed by CPS, nor, as of the
date of this Agreement, does CPS know of
any activities or proceedings of any labor
union to organize any such employees;
and (iii) CPS has no Knowledge of any
strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with
respect to any employees of CPS that
would reasonably be expected to have a
Material Adverse Effect.
3.18
LIMITATION ON BUSINESS CONDUCT. CPS is not a party to, nor has
any
obligation under, any contract or
agreement, written or oral, that contains any
covenants currently or prospectively
limiting in any material respect the
freedom of CPS to engage in any line of
business or to compete with any entity.
3.19 TITLE
TO PROPERTY. Except as set forth in Section 3.19 of the
Disclosure Schedules, CPS owns the
properties and assets that it purports to own
free and clear of all Liens, except for
Liens that arise in the ordinary course
of business and do not materially impair
CPS's use of such properties or assets,
Liens for taxes not yet due or delinquent
or being contested in good faith by
appropriate proceedings for which reserves
have been established in accordance
with GAAP and Liens securing obligations
under CPS's credit agreements, loan
agreements and
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equipment leases. Except as set forth in
Schedule 3.19 of the Disclosure
Schedules, with respect to the property and
assets it leases, CPS, and to CPS's
Knowledge, each of the other parties
thereto, is in material compliance with
such leases, and CPS holds a valid
leasehold interest free of any Liens created
by, through or under CPS, except those
referred to above. The rights, properties
and assets presently owned, leased or
licensed by CPS include all rights,
properties and assets necessary to permit
CPS to conduct its business in all
material respects in the same manner as its
businesses have been conducted prior
to the date hereof.
3.20 OWNED
AND LEASED PREMISES. To the Knowledge of CPS, each of the
buildings, structures and premises owned or
leased by CPS is in reasonably good
repair and operating condition.
3.21
ENVIRONMENTAL MATTERS. Except as set forth in Section 3.21 of
the
Disclosure Schedules:
(a) CPS is in material compliance with the Environmental Laws,
which
compliance includes the possession by CPS
of all material Permits and
governmental authorizations required under
applicable Environmental Laws, and
compliance in all material respects with
the terms and conditions thereof,
except in each case where such
non-compliance would not reasonably be expected
to have a Material Adverse Effect. CPS has
not received any written
communication from a Governmental Authority
that alleges that it is not in such
material compliance except where such
non-compliance would not reasonably be
expected to have a Material Adverse
Effect.
(b) There are no Environmental Claims, including claims based
on
"ARRANGER LIABILITY," pending or, to the
Knowledge of CPS, threatened against
CPS or to the Knowledge of CPS, pending or
threatened against any Person or
entity whose liability for any
Environmental Claim CPS has, to the Knowledge of
CPS, retained or assumed either
contractually or by operation of law, except for
such Environmental Claims that would not
reasonably be expected to have a
Material Adverse Effect.
(c) To the Knowledge of CPS, there are no past or present
actions,
inactions, activities, circumstances,
conditions, events or incidents, including
the release, emission, discharge, presence
or disposal of any Material of
Environmental Concern, that would form the
basis of any Environmental Claim
against CPS or against any Person whose
liability for any Environmental Claim
CPS has retained or assumed either
contractually or by operation of law, except
for such Environmental Claims that would
not reasonably be expected to have a
Material Adverse Effect.
(d) CPS is in compliance in all material respects with
Environmental
Laws as they relate to (i) any on-site or
off-site locations where, to CPS's
Knowledge, CPS has stored, disposed or
arranged for the disposal of Materials of
Environmental Concern for itself (but not
on behalf of others) or (ii) any
underground storage tanks located on
property owned or leased by CPS of which
CPS has Knowledge.
Page 16 of 45 - AGREEMENT AND PLAN OF
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<PAGE>
(e) For purposes of this Agreement:
(i) "ENVIRONMENTAL CLAIM" means any written claim, action,
cause of action, investigation or written
notice by any Person alleging
potential liability (including potential
liability for investigatory costs,
cleanup costs, governmental response costs,
natural resources damages, property
damages, personal injuries, or penalties)
arising out of, based on or resulting
from (A) the presence, or release into the
environment, of any Material of
Environmental Concern at any location,
whether or not owned or operated by CPS,
or (B) circumstances forming the basis of
any violation, or alleged violation,
of any Environmental Law.
(ii) "ENVIRONMENTAL LAWS" means all Federal, state, local and
foreign laws or regulations relating to
pollution or protection of human health
and the environment (including ambient air,
surface water, ground water, land
surface or sub-surface strata), including
laws and regulations relating to
emissions, discharges, releases or
threatened releases of Materials of
Environmental Concern, or otherwise
relating to the manufacture, processing,
distribution, use, treatment, storage,
disposal, transport or handling of
Materials of Environmental Concern.
(iii) "MATERIAL OF ENVIRONMENTAL CONCERN" means chemicals,
pollutants, contaminants, hazardous
materials, hazardous substances and
hazardous wastes, toxic substances,
petroleum and petroleum products that are
regulated under any Environmental Laws.
3.22
INSURANCE. Section 3.22 of the Disclosure Schedules contains a
complete and accurate list of all fire,
liability, worker's compensation and
other forms of insurance insuring CPS, and
its respective officers and
directors, assets and operations. The
insurance polices maintained by CPS are
with reputable insurance carriers and have
no premium delinquencies.
3.23
PRODUCT LIABILITY AND RECALLS.
(a) Except as disclosed in Section 3.23 of the Disclosure
Schedules,
to CPS's Knowledge, there is no claim,
pending or overtly threatened, against
CPS for injury to Person or property of
employees or any third parties suffered
as a result of the sale of any product or
performance of any service by CPS,
including claims arising out of the
defective or unsafe nature of its products
or services, that would reasonably be
expected, individually or in the
aggregate, to have a Material Adverse
Effect.
(b) Except as disclosed in Section 3.23 of the Disclosure
Schedules,
there is no pending or, to the Knowledge of
CPS, overtly threatened recall or
investigation of any product sold by CPS,
which recall or investigation would
reasonably be expected, individually or in
the aggregate, to have a Material
Adverse Effect.
3.24
CUSTOMERS. Section 3.24 of the Disclosure Schedules sets forth a
list
of CPS's ten (10) largest customers
(detailed, in the case of government
agencies, by separate government agency) in
terms of gross sales for the
twelve-month period ended October 31, 2004.
Except as set forth in Section 3.24
of the Disclosure Schedules, since October
31, 2004, there have not been any
changes in the business relationships of
CPS with any of the customers named
therein that would constitute a Material
Adverse Effect, other than completion
of contracted work in the
Page 17 of 45 - AGREEMENT AND PLAN OF
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<PAGE>
normal course of business. Except as set
forth in Section 3.24 of the Disclosure
Schedules, no customer of CPS, on a
combined basis, accounted for more than five
percent (5%) of the revenues of CPS for the
twelve month period ended October
31, 2004.
3.25
INTERESTED PARTY TRANSACTIONS. Except as set forth in Section 3.25
of
the Disclosure Schedules, no event has
occurred that would be required to be
reported, if CPS were a reporting company
under Section 13 of the Securities
Exchange Act of 1934, pursuant to Item 404
of Regulation S-B promulgated by the
Securities and Exchange Commission (without
regard to the $60,000 threshold
contained in Item 404).
3.26 FULL
DISCLOSURE. No statement contained in any certificate or
schedule, including, without limitation,
the Disclosure Schedules, furnished or
to be furnished by CPS to Microfield or
Merger Sub in, or pursuant to the
provisions of, this Agreement contains or
shall contain any untrue statement of
a material fact or omits or will omit to
state any material fact necessary, in
the light of the circumstances under which
it was made, in order to make the
statements herein or therein not
misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF MICROFIELD AND MERGER SUB
Microfield
and Merger Sub jointly and severally represent and warrant to
CPS that, except as set forth in the
correspondingly numbered sections of the
Disclosure Schedules:
4.1
ORGANIZATION AND GOOD STANDING. Each of Microfield and Merger Sub
is a
corporation duly organized and validly
existing under the laws of the
jurisdiction of its incorporation and each
has all requisite corporate power and
authority to own, lease and operate its
properties and to carry on its business
as now being conducted.
4.2 CAPITALIZATION. The authorized
capital stock of Microfield consists of
(a) 125,000,000 shares of Microfield Common
Stock and (b) 10,000,000 shares of
preferred stock (the "PREFERRED SHARES").
As of July 2, 2005, (i) 18,776,240
shares of Microfield Common Stock were
issued and outstanding, (ii) 6,821,436
shares of Series 2 Preferred Shares were
issued and outstanding, (iii) 3,640.804
shares of Series 3 Preferred Shares were
issued and outstanding, (iv) 4,550.000
shares of Series 4 Preferred Shares were
issued and outstanding, (v) 3,201,825
shares of Microfield Common Stock were
reserved for future issuance pursuant to
outstanding options to purchase Microfield
Common Stock, (vi) 7,709,363 shares
of Microfield Common Stock are available
for issuance pursuant to the 2004 Stock
Incentive Plan, as amended; and (vii)
5,269,039 shares of Microfield Common
Stock were reserved for future issuance
upon exercise of warrants to purchase
Microfield Common Stock. No other capital
stock of Microfield is authorized or
issued. The shares of Microfield Common
Stock to be issued to the CPS
Shareholder in the Merger will be duly
authorized, validly issued, fully paid
and nonassessable.
4.3
SUBSIDIARIES. Merger Sub and Christenson Velagio, Inc., an
Oregon
corporation, are wholly owned subsidiaries
of Microfield. Microfield has no
other subsidiaries.
4.4
AUTHORIZATION; BINDING AGREEMENT. Microfield and Merger Sub have
all
requisite corporate power and authority to
execute and deliver this Agreement
and to complete the transactions
contemplated hereby. The execution and delivery
of this Agreement and the
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<PAGE>
completion of the transactions contemplated
hereby, including, but not limited
to, the Merger, have been duly and validly
authorized by the respective boards
of directors of Microfield and Merger Sub,
and no other corporate proceedings on
the part of Microfield or Merger Sub are
necessary to authorize the execution
and delivery of this Agreement or to
complete the transactions contemplated
hereby (other than the requisite approval
by the sole shareholder of Merger Sub
of this Agreement and the Merger). This
Agreement has been duly and validly
executed and delivered by each of
Microfield and Merger Sub and constitutes the
legal, valid and binding agreement of
Microfield and Merger Sub, enforceable
against each of Microfield and Merger Sub
in accordance with its terms, subject
to the Enforceability Exceptions.
4.5
GOVERNMENTAL APPROVALS. No Consent from or with any
Governmental
Authority on the part of Microfield or
Merger Sub is required in connection with
the execution or delivery by Microfield and
Merger Sub of this Agreement or the
completion by Microfield and Merger Sub of
the transactions contemplated hereby
other than (a) the filing of the Articles
of Merger with the Secretary of State
of Oregon in accordance with the OBCA, and
(b) those Consents that, if they were
not obtained or made, would not reasonably
be expected to have a Material
Adverse Effect.
4.6 NO
VIOLATIONS. The execution and delivery of this Agreement, the
completion of the transactions contemplated
hereby and compliance by Microfield
and Merger Sub with any of the provisions
hereof applicable to such party will
not (a) conflict with or result in any
breach of any provision of the Articles
of Incorporation and Bylaws of Microfield,
Merger Sub or other similar documents
of any other Subsidiary of Microfield, or
(b) require any Consent under or
result in a violation or breach of, or
constitute (with or without notice or
lapse of time or both) a default (or give
rise to any right of termination,
cancellation or acceleration) under any of
the terms, conditions or provisions
of, any material note, bond, mortgage,
indenture, contract, lease, license,
agreement or instrument to which
Microfield, Merger Sub or any other Subsidiary
of Microfield is a party or by which any of
them or any of their respective
assets or property is subject, except in
any such case for any such conflicts,
violations, breaches, defaults or other
occurrences that would not prevent or
delay completion of the Merger, or
otherwise materially and adversely affect the
ability of Microfield or Merger Sub to
perform their respective obligations
under this Agreement.
4.7
LITIGATION. Except as disclosed in Section 4.7 of the
Disclosure
Schedules, there is no Litigation pending
or, to the Knowledge of Microfield,
threatened against Microfield, Merger Sub
or any of its other Subsidiaries
which, individually or in the aggregate,
would reasonably be expected to have a
Material Adverse Effect, nor is there any
judgment, decree, injunction, rule or
order of any Governmental Authority
outstanding against Microfield, Merger Sub
or any of its other Subsidiaries which,
individually or in the aggregate, would
reasonably be expected to have a Material
Adverse Effect.
4.8 SEC
REPORTS AND FINANCIAL STATEMENTS. Microfield has furnished CPS
and
the CPS Shareholder with complete copies of
all registration statements, reports
and proxy statements, including amendments
thereto, filed with the SEC since
December 31, 2000, and prior to the date of
this Agreement (collectively, the
"MICROFIELD SEC REPORTS"). Except as
disclosed in Section 4.8 of the Disclosure
Schedules, each of the Microfield SEC
Reports, as of the date filed, complied in
all material respects with the applicable
requirements of the Act, the
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<PAGE>
Securities Exchange Act of 1934 and the
rules and regulations promulgated by the
Securities and Exchange Commission
thereunder.
4.9 NO
UNDISCLOSED LIABILITIES. Except as disclosed in Section 4.9 of
the
Disclosure Schedules and in the Microfield
SEC Reports, Microfield has no
liabilities (absolute, accrued, contingent
or other), except liabilities (a)
adequately provided for in Microfield
financial statements contained in the
latest Microfield SEC Reports or provided
to the CPS Sharesholder for a period
since the effective date of any financial
statement contained in the latest
Microfield SEC Reports (the "MICROFIELD
FINANCIAL STATEMENTS"); or (b) incurred
in the ordinary course of business on or
before the dates of the Microfield
Financial Statements and not required under
GAAP to be reflected on the Balance
Sheet; or (c) incurred since the issuing of
the Microfield Financial Statements
in the ordinary course of business
consistent with past practice; or (d)
incurred in connection with this Agreement;
or (e) that would reasonably not be
expected to have a Material Adverse
Effect.
4.10 TAXES AND
TAX RETURNS. Except as disclosed in Section 4.10 of the
Disclosure Schedules, Microfield has timely
filed, or caused to be timely filed,
all Tax Returns required to be filed by it,
and all such Tax Returns are true,
complete and correct in all material
respects, and has timely paid, collected or
withheld, or caused to be paid, collected
or withheld, all material amounts of
Taxes required to be paid, collected or
withheld, other than such Taxes for
which adequate reserves in the financial
statements contained in the Microfield
SEC Reports have been established and which
are being contested in good faith.
There are no material claims or assessments
pending against Microfield for any
alleged deficiency in any Tax, and neither
Microfield nor any of its officers,
directors or employees has been notified of
any proposed Tax claims or
assessments against Microfield. Microfield
has not executed any currently
effective waivers or extensions of any
applicable statute of limitations to
assess any material amount of Taxes. There
are no outstanding requests by
Microfield for any extension of time within
which to file any Tax Return or
within which to pay any material amounts of
Taxes shown to be due on any Tax
Return. There are no Liens for material
amounts of Taxes on the assets of
Microfield except for statutory liens for
current Taxes not yet due and payable.
There are no outstanding powers of attorney
enabling any party to represent
Microfield with respect to Tax matters.
4.11
COMPLIANCE WITH LAWS. To the Knowledge of Microfield, the business
of
Microfield has been operated in compliance
with all Laws applicable thereto,
except for any non-compliance that would
not reasonably be expected to have a
Material Adverse Effect.
4.12 FULL
DISCLOSURE. No statement contained in any certificate or
schedule, including, without limitation,
the Disclosure Schedules, furnished or
to be furnished by Microfield to CPS or the
CPS Shareholder in, or pursuant to
the provisions of, this Agreement contains
or shall contain any untrue statement
of a material fact or omits or will omit to
state any material fact necessary,
in the light of the circumstances under
which it was made, in order to make the
statements herein or therein not
misleading.
Page 20 of 45 - AGREEMENT AND PLAN OF
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<PAGE>
4.13 NO
PRIOR ACTIVITIES. Except for obligations or liabilities
incurred
in connection with its incorporation or
organization or the negotiation and
completion of this Agreement and the
transactions contemplated hereby, Merger
Sub has not incurred any obligations or
liabilities and has not engaged in any
business or activities of any type or kind
whatsoever or entered into any
agreements or arrangements with any
Person.
ARTICLE 5
ADDITIONAL COVENANTS OF CPS
CPS
covenants and agrees as follows:
5.1
CONDUCT OF BUSINESS OF CPS.
(a) Unless Microfield shall otherwise consent in writing (which
consent, in the case of paragraphs (iv),
(v), (ix), (xi), (xii), or (xiii)
below, shall not be unreasonably withheld,
delayed or conditioned) and except as
expressly contemplated by this Agreement or
in the Disclosure Schedules, during
the period from the date of this Agreement
to the Effective Time, (i) CPS shall
conduct its business in the ordinary course
and consistent with past practice,
and CPS shall use its reasonable best
efforts to preserve substantially intact
its business organization, to keep
available the services of its present
officers and employees and to preserve the
present commercial relationships of
CPS with Persons with whom CPS does
significant business and (ii) without
limiting the generality of the foregoing,
CPS will not:
(i) Amend or propose to amend its Articles of Incorporation or
Bylaws (or similar organizational
documents);
(ii) Authorize for issuance, issue, grant, sell, pledge,
dispose of or propose to issue, grant,
sell, pledge or dispose of any equity
interests in CPS, or any options, warrants,
commitments, subscriptions or rights
of any kind to acquire or sell any equity
interests in or other securities of
CPS, including, but not limited to, any
securities convertible into or
exchangeable for equity interests in
CPS;
(iii) Split, combine or reclassify any of its Stock or
declare, pay or set aside any dividend or
other distribution (whether in cash,
equity interests or property or any
combination thereof) in respect of its
Stock, or directly or indirectly redeem,
purchase or otherwise acquire or offer
to acquire any of its equity interests or
other securities;
(iv) Create or incur any indebtedness for borrowed money in
excess of $25,000 or issue any debt
securities or make any loans or advances,
outside the ordinary course of
business;
(v) Sell, pledge, dispose of or encumber any assets of CPS,
outside the ordinary course of
business;
(vi) Authorize any capital expenditures or purchases of fixed
assets in excess of $25,000, outside the
ordinary course of business;
(vii) Assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the
obligations of any Person, or make any
loans or advances;
Page 21 of 45 - AGREEMENT AND PLAN OF
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<PAGE>
(viii) Voluntarily incur any material liability or obligation
(absolute, contingent or otherwise) in
excess of $25,000, outside the ordinary
course of business.
(ix) Increase in any manner the compensation of any of its
officers or employees or enter into,
establish, amend or terminate any
employment, consulting, retention, change
in control, collective bargaining,
bonus or other incentive compensation,
profit sharing, health or other welfare,
stock option or other equity, pension,
retirement, vacation, severance, deferred
compensation or other compensation or
benefit plan, policy, agreement, trust,
fund or arrangement with, for or in respect
of, any shareholder, officer,
director, employee, consultant or affiliate
other than, in any such case
referred to above, as may be required by
Law or as required pursuant to the
terms of agreements in effect on the date
of this Agreement;
(x) Alter through merger, liquidation, reorganization,
restructuring or in any other fashion the
corporate structure or ownership of
CPS;
(xi) Except as may be required as a result of a change in Law,
change any of the accounting principles or
practices used by it;
(xii) Make any tax election or settle or compromise any income
tax liability;
(xiii) Pay, discharge or satisfy any material claims,
liabilities or obligations (absolute,
accrued, asserted or unasserted,
contingent or other), other than the
payment, discharge or satisfaction in the
ordinary course of business and consistent
with past practice of liabilities
reflected or reserved against in, or
contemplated by, the Financial Statements
(or the notes thereto) of CPS or incurred
in the ordinary course of business
consistent with past practice;
(xiv) Take, or agree in writing or otherwise to take, any of
the foregoing actions or any action that
would make any of the representations
or warranties of CPS contained in this
Agreement untrue or incorrect in any
material respect at or prior to the
Effective Time; or
(xv) Acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation,
partnership or other business organization or
division thereof.
(b) CPS shall comply with all Laws applicable to it or any of
its
properties, assets or business and maintain
in full force and effect all Permits
necessary for such business, except in any
such case for any failure so to
comply or maintain that would not
reasonably be expected to result in a Material
Adverse Effect.
5.2
NOTIFICATION OF CERTAIN MATTERS. CPS shall give prompt notice
to
Microfield if any of the following occur
after the date of this Agreement: (a)
receipt of any notice or other
communication in writing from any party alleging
that the Consent of such party is or may be
required in connection with the
transactions contemplated by this
Agreement; (b) receipt of any notice or other
communication from any Governmental
Authority in connection with the
transactions contemplated by this
Agreement; (c) the occurrence of an event that
would be reasonably likely (i) to have a
Material Adverse Effect or (ii) to
cause any condition set forth in
Page 22 of 45 - AGREEMENT AND PLAN OF
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<PAGE>
Section 8.1 or 8.2 to be unsatisfied; or
(d) the commencement or, to the
Knowledge of CPS, threat of any Litigation
involving or affecting CPS, any of
its respective properties or assets, or any
employee, agent, director, officer
or shareholder, in his or her capacity as
such, of CPS which, if pending on the
date hereof, would have been required to
have been disclosed pursuant to this
Agreement or which relates to the
completion of the Merger.
5.3 ACCESS
AND INFORMATION. Between the date of this Agreement and the
Effective Time, and without intending by
this Section 5.3 to limit any of the
other obligations of the parties under this
Agreement, CPS will give, and shall
direct its accountants and legal counsel to
give, Microfield and its authorized
representatives (including, without
limitation, its financial advisors,
accountants and legal counsel), at
reasonable times and without undue disruption
to or interference with the normal conduct
of the business and affairs of CPS,
access as reasonably required in connection
with the transactions provided for
in this Agreement to all offices and other
facilities and to all contracts,
agreements, commitments, books and records
of or pertaining to CPS and will
furnish Microfield with such financial and
operating data and other information
with respect to the business and properties
of CPS as Microfield may from time
to time reasonably request in connection
with such transactions.
5.4
SHAREHOLDER APPROVAL. As soon as practicable, CPS will take all
steps
necessary to duly call, give notice of,
convene and hold the Special Meeting for
the purpose of voting upon the Merger, this
Agreement and the transactions
contemplated hereby, or provide unanimous
written consent of the CPS Shareholder
approving this Agreement and the
transactions contemplated hereby.
5.5
REASONABLE BEST EFFORTS. Subject to the terms and conditions
herein
provided, CPS agrees to use reasonable best
efforts to take, or cause to be
taken, all actions and to do, or cause to
be done, all things necessary, proper
or advisable to complete and make effective
as promptly as practicable the
transactions contemplated by this
Agreement, including, but not limited to,
obtaining all Consents from Governmental
Authorities and other parties required
for the completion of the Merger and the
transactions contemplated thereby,
including without limitation all Consents
required under any Material Contract.
Upon the terms and subject to the
conditions hereof, CPS agrees to use
reasonable best efforts to take, or cause
to be taken, all actions and to do, or
cause to be done, all things necessary to
satisfy the other conditions of the
Closing set forth herein.
5.6 PUBLIC
ANNOUNCEMENTS. So long as this Agreement is in effect, CPS
shall not, and shall use reasonable best
efforts to cause its affiliates not to,
issue or cause the publication of any press
release or any other announcement
with respect to the Merger or the
transactions contemplated hereby without the
consent of Microfield, except where such
release or announcement is required by
applicable Law, in which case CPS, prior to
making such announcement, will
consult with Microfield regarding the
same.
5.7
COMPLIANCE. In completing the transactions contemplated hereby,
CPS
shall comply with all applicable Laws.
5.8 CPS
SHAREHOLDER APPROVAL. The CPS Shareholder covenants and agrees
to
vote in favor of or consent to this Merger
Agreement and the transaction
contemplated herein.
Page 23 of 45 - AGREEMENT AND PLAN OF
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<PAGE>
5.9 DEBT
RESTRUCTURE. CPS and the CPS Shareholder covenant and agree to
use their reasonable best efforts to
restructure the primary categories of debt
and liabilities of CPS described below (not
including accounts payable and
accrued expenses incurred in ordinary
course and within terms) prior to the
Effective Time substantially as follows or
as otherwise approved in writing by
Microfield:
<TABLE>
<S>
<C>
CAPCO Line of Credit Facility
$ 2,000,000
US Bank Term Debt
$ 1,900,000
Accounts Payable (60 days past due)
$ 595,270
Accrued Expenses/Tax Liabilities
(beyond terms)
$ 228,123
Notes Payable
$ 1,906,003
Operating Leases
$ 52,272
</TABLE>
ARTICLE 6
ADDITIONAL COVENANTS OF MICROFIELD AND MERGER SUB
Microfield
and Merger Sub covenant and agree as follows:
6.1
CONDUCT OF BUSINESS OF MICROFIELD.
(a) Unless CPS and the CPS Shareholder shall otherwise consent
in
writing (which consent, in the case of
paragraphs (ii), (iii), (iv), (v), (ix),
(x), (xii), or (xiii) below, shall not be
unreasonably withheld, delayed or
conditioned) and except as expressly
contemplated by this Agreement or in the
Disclosure Schedules, during the period
from the date of this Agreement to the
Effective Time, (i) Microfield shall
conduct its business in the ordinary course
and consistent with past practice, and
Microfield shall use its reasonable best
efforts to preserve substantially intact
its business organization, to keep
available the services of its present
officers and employees and to preserve the
present commercial relationships of
Microfield with Persons with whom Microfield
does significant business and (ii) without
limiting the generality of the
foregoing, Microfield will not:
(i) Amend or propose to amend its Articles of Incorporation or
Bylaws (or similar organizational
documents);
(ii) Authorize for issuance, issue, grant, sell, pledge,
dispose of or propose to issue, grant,
sell, pledge or dispose of any equity
interests in Microfield, or any options,
warrants, commitments, subscriptions or
rights of any kind to acquire or sell any
equity interests in or other
securities of Microfield, including, but
not limited to, any securities
convertible into or exchangeable for equity
interests in Microfield;
(iii) Split, combine or reclassify any of its Stock or
declare, pay or set aside any dividend or
other distribution (whether in cash,
equity interests or property or any
combination thereof) in respect of its
Stock, or directly or indirectly redeem,
purchase or otherwise acquire or offer
to acquire any of its equity interests or
other securities;
(iv) Create or incur any indebtedness for borrowed money in
excess of $50,000 or issue any debt
securities or make any loans or advances, in
each instance outside the ordinary course
of business;
Page 24 of 45 - AGREEMENT AND PLAN OF
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<PAGE>
(v) Sell, pledge, dispose of or encumber any assets of
Microfield, outside the ordinary course of
business;
(vi) Authorize any capital expenditures or purchases of fixed
assets in excess of $50,000, outside the
ordinary course of business;
(vii) Assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the
obligations of any Person, or make any
loans or advances;
(viii) Voluntarily incur any material liability or obligation
(absolute, contingent or otherwise) in
excess of $50,000, outside the ordinary
course of business;
(ix) Increase in any manner the compensation of any of its
officers or employees or enter into,
establish, amend or terminate any
employment, consulting, retention, change
in control, collective bargaining,
bonus or other incentive compensation,
profit sharing, health or other welfare,
stock option or other equity, pension,
retirement, vacation, severance, deferred
compensation or other compensation or
benefit plan, policy, agreement, trust,
fund or arrangement with, for or in respect
of, any shareholder, officer,
director, employee, consultant or affiliate
other than, in any such case
referred to above, as may be required by
Law or as required pursuant to the
ter
