<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MICROFIELD GROUP, INC.
AND
ECI ACQUISITION CO.
AND
ENERGYCONNECT, INC.
DATED AS OF OCTOBER 11, 2005
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT
AND PLAN OF MERGER is made as of October 11, 2005 by and
among MICROFIELD GROUP, INC., an Oregon
corporation ("Microfield"), ECI
ACQUISITION CO., an Oregon corporation
("Merger Sub"), and ENERGYCONNECT, INC.,
a Nevada corporation ("ECI").
RECITALS
A. The
respective boards of directors of Microfield, Merger Sub and
ECI
have: (a) determined that the Merger of ECI
with and into Merger Sub pursuant
and subject to all of the terms and
conditions of this Agreement is advisable,
fair and in the best interests of
Microfield, ECI 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,
ECI, 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.
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<PAGE>
"CLOSING DATE"
means October 13, 2005, or such other date as the parties
may mutually agree in writing.
"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.
"DISCLOSURE
SCHEDULES" means the Disclosure Schedules attached to this
Agreement.
"ECI" means
EnergyConnect, Inc., a Nevada corporation.
"ECI OPTIONS"
means options to purchase shares of ECI Stock granted to
employees of ECI pursuant to the terms of
the Employee Stock Option Plan adopted
by ECI that are outstanding immediately
prior to the Effective Time.
"ECI
SHAREHOLDERS" means all the holders of record of ECI Stock
immediately
prior to the Effective Time.
"ECI STOCK"
means shares of Class A common stock, without par value, of
ECI.
"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.
"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.
"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 ECI, 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.
"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 $250,000 or more,
whether taken separately or together
in the aggregate with other similar events,
other than changes arising out of
general economic conditions
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unrelated to the business in which the
party is engaged. When reference is made
to Microfield in this context, such
reference shall be deemed to refer to
Microfield and its Subsidiaries taken as a
whole.
"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 $250,000 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. When reference is
made to Microfield in this context, such
reference shall be deemed to refer to
Microfield and its Subsidiaries taken as a
whole.
"MATERIAL
CONTRACTS" means any agreement or contract to which a party, or
by which its properties or assets, is
bound, which could reasonably be expected
to 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; and (b) all other 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 a party of less
than $50,000 over the term of such
contract, agreement, commitment or other
understanding or arrangement.
"MERGER" means
the merger of ECI with and into Merger Sub pursuant to this
Agreement, the OBCA, and the NGCL.
"MERGER
CONSIDERATION" means the aggregate number of shares of
Microfield
Common Stock and Microfield Warrants
issuable to the ECI Shareholders pursuant
to Section 2.7, subject to any rounding for
fractional shares pursuant to
Section 2.9(b).
"MERGER SUB"
means ECI 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
WARRANT" means a warrant to purchase one share of Microfield
Common Stock at a price equal to 110% of
the average of the closing prices of
Microfield Common Stock on the OTCBB on the
five trading days immediately
preceding the Closing Date, subject to the
terms and conditions set forth in the
Stock Purchase Warrant in the form attached
as Exhibit A.
"NGCL" means the
Nevada General Corporation Law, as the same shall be in
effect from time to time.
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"OBCA" means the
Oregon Business Corporation Act, as the same shall be in
effect from time to time.
"OPTION EXCHANGE
RATIO" means 191,820 shares of Microfield Common Stock.
"PERSON" means a
natural person, corporation, trust, partnership, limited
liability company, governmental entity,
agency or branch or department thereof,
or any other legal entity.
"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 ECI, as applicable, directly
or through one (1) or more entities
that are themselves Subsidiaries or (b)
with respect to which Microfield or ECI,
as applicable, may elect a majority of the
board of directors or similar
governing body.
"SURVIVING
CORPORATION" means Merger Sub, which shall survive the Merger
of
ECI with and into Merger Sub.
OTHER TERMS. The
following terms shall have the meanings specified in the
following noted sections of this
Agreement:
<TABLE>
<CAPTION>
TERM
SECTION
----------------- ---------
<S>
<C>
Preferred Shares 4.2
Related Documents Article 7
Rule 144
2.10
Securities Act 2.10
</TABLE>
ARTICLE 2. THE
MERGER
2.1 THE MERGER. At the Effective Time and upon and subject to
the
terms and conditions of this Agreement, ECI
will be merged with and into Merger
Sub. Merger Sub 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 ECI shall cease. The Merger
shall be pursuant to the provisions of,
and shall be with the effects provided in,
the OBCA and the NGCL.
2.2 EFFECTIVE TIME. Subject to the terms and conditions of this
Agreement, on the Closing Date, Merger Sub
and ECI will cause the Articles of
Merger to be executed, delivered and filed
as provided in the OBCA and the NGCL.
The Merger shall become effective at the
time specified in of the Articles of
Merger filed with the Oregon Secretary of
State, Corporation Division, and the
Nevada Secretary of State.
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, except
for Article I thereof which shall be
amended to read as follows:
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"The name of the Corporation is
EnergyConnect, Inc., and its duration shall be
perpetual."
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
A. Mark Walter
Michael Stansell
Rodney M. Boucher
Gene Ameduri
The following officers shall be the officers of the Surviving
Corporation, to hold office as provided in
the Bylaws:
Gene Ameduri
President
William C. McCormick Chairman of the Board
Rodney M. Boucher Chief
Executive Officer
Michael Stansell
Secretary
2.6 MERGER SUB STOCK. At and after the Effective Time, each share
of
Merger Sub common stock issued and
outstanding immediately prior to the Closing
Date shall remain an issued and outstanding
share of common stock of the
Surviving Corporation and shall not be
affected by the Merger.
2.7 CONVERSION OF ECI STOCK. At the Effective Time, by virtue of
the
Merger and without any action on the part
of Merger Sub, ECI or Microfield, each
share of ECI Stock issued and outstanding
immediately prior to the Effective
Time shall be converted into the right to
receive 141,058.27 validly issued,
fully paid and nonassessable shares of
Microfield Common Stock and 101,522.84
Microfield Warrants. The total number of
Microfield Warrants to be issued to a
given ECI Shareholder shall be rounded to
the nearest whole share of Microfield
Common Stock. No cash shall be paid in lieu
of fractional shares. The ECI
Shareholders will receive the following
shares of Microfield Common Stock and
Microfield Warrants:
<TABLE>
<CAPTION>
TOTAL SHARES
OF
ECI STOCK
MICROFIELD COMMON
TOTAL
ECI SHAREHOLDERS
OWNED
STOCK
MICROFIELD WARRANTS
------------------------- ------------ ------------------------
------------------------
<S>
<C>
<C>
<C>
Rodney M. Boucher
60 shares of
common stock
8,463,496
6,091,371
</TABLE>
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<TABLE>
<S>
<C>
<C>
<C>
Vince Cushing
40 shares of
common stock
5,642,331
4,060,914
Gene Ameduri
38 shares of
common
stock 5,360,214
3,857,868
Energy Fund II LLC
44 shares of
common stock
6,206,564
4,467,005
Mark Boucher
1 share of
common stock
141,058
101,523
Boucher Heritage Holdings 2 shares of
LLC
common stock
282,117
203,046
Carey Halsted
2 shares of
common stock
282,117
203,046
Alan Gartner
1 share of
common stock
141,058
101,523
Wilfred A. Boucher
4 shares of
common stock
564,233
406,091
Centerlogic, Inc.
2 shares of
common stock
282,117
203,046
Microfield Group, Inc. 5 shares
of
common stock 0,
see Section 2.8 below 0, see Section 2.8 below
</TABLE>
2.8 CANCELLATION OF CERTAIN SHARES. Each share of ECI Common
Stock
held by Microfield immediately prior to the
Effective Time will, by virtue of
the Merger and without any action on the
part of Microfield, cease to be
outstanding, be canceled and retired
without payment of any consideration
therefor and cease to exist.
2.9 PROCEDURE FOR PAYMENT.
(a) SURRENDER OF STOCK. From and after the Effective Time, the
holders of record of ECI Stock, 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 and one or more stock purchase
warrants in the form attached as
Exhibit A evidencing Microfield Warrants,
in each case, into which such ECI
Stock shall have been converted pursuant to
the provisions of Section 2.7.
(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. The portion
of the Merger Consideration to be
issued to each holder of record of ECI
Stock will be rounded to the nearest
whole share.
(c) NO FURTHER RIGHTS IN ECI STOCK. All shares of Microfield
Common Stock and Microfield Warrants issued
upon conversion of the ECI 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 holders of record of ECI
Stock pertaining to
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the ECI Stock. Following the Effective
Time, the holders of record of ECI Stock
shall cease to have any rights with respect
to such ECI Stock except as
otherwise provided in this Agreement or by
law.
2.10 UNREGISTERED SHARES. All ECI Shareholders have been informed
by
Microfield that the Microfield Common Stock
and the Microfield Warrants (as well
as the shares of Microfield Common Stock
underlying such warrants) conveyed
hereunder as Merger Consideration have not
been registered under the Securities
Act of 1933 (the "SECURITIES ACT"). All ECI
Shareholders have also been informed
that such Microfield Common Stock will bear
the legend set forth in Section
2.11, 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 an ECI 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. The Microfield Warrants will bear
the legend set forth in the form attached
as Exhibit A and will be subject to
comparable restrictions on transfer as
described above for the Microfield Common
Stock.
2.11 STOCK CERTIFICATE LEGEND. Stock transfer instructions will
be
given to Microfield's transfer agent with
respect to the Merger Consideration
and 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 (acceptable to 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."
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2.12 ECI OPTIONS.
(a) NEW OPTIONS. At the Effective Time, by virtue of the Merger
and without any action on the part of any
holder of any ECI Option, each ECI
Option, whether vested or unvested,
exercisable or unexercisable, shall be
deemed to constitute an option (a "New
Option") to purchase, on the same terms
and conditions as were applicable under the
terms of the ECI Employee Stock
Option Plan, a number of shares of
Microfield Common Stock at an exercise price
per share determined respectively as
follows:
(i) Number of Shares. The number of shares of Microfield
Common Stock subject to a New Option shall
be equal to the product of (I) the
number of shares of ECI Stock purchasable
upon exercise of the ECI Option and
(II) the Option Exchange Ratio, the product
being rounded down to the nearest
whole share; and
(ii) Exercise Price. The exercise price per share of
Microfield Common Stock purchasable upon
exercise of a New Option shall be equal
to (I) the exercise price per share of ECI
Stock under the ECI Option divided by
(II) the Option Exchange Ratio, the
quotient being rounded up to the nearest
cent.
With respect to
any such ECI Options that are "incentive stock options" (as
defined in Section 422(b) of the Code) the
foregoing adjustments shall be
effected in a manner consistent with
Section 424(a) of the Code and the
regulations promulgated thereunder. Prior
to the Effective Time, ECI or its
Board of Directors will take all action
necessary on its part to give effect to
the provisions of this Section 2.12(a) and
shall take such other actions
reasonably requested by Microfield to give
effect to the foregoing.
(b) RESERVATION AND REGISTRATION OF NEW OPTION SHARES. Prior to
the Effective Time, Microfield shall take
all corporate action necessary to
reserve for future issuance a sufficient
number of shares of Microfield Common
Stock to provide for the satisfaction of
its obligations, if any, with respect
to the New Options. Prior to January 31,
2007, Microfield shall use its
reasonable best efforts to file a
registration statement on Form S-8 (or any
successor or other appropriate form) under
the Securities Act with respect to
the Microfield Common Stock issuable upon
exercise of the New Options and shall
use its reasonable efforts to maintain the
effectiveness of such registration
statement and to comply with the disclosure
requirements specified in Form S-8
for so long as such New Options remain
outstanding.
(c) NOTICE TO HOLDERS. As soon as practicable after the
Effective
Time, Microfield shall deliver to the
holders of ECI Options appropriate notices
setting forth such holders' rights pursuant
to the New Options and that the
agreements evidencing the grants of ECI
Options shall continue in effect on the
same terms and conditions (subject to the
adjustments required by this Section
2.12 after giving effect to the Merger).
The New Options shall be subject to the
terms of the Microfield 2004 Stock
Incentive Plan, including Section 13(d)
thereof.
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2.13 AGREEMENT TO VOTE IN FAVOR OF MERGER. For purposes of this
Section 2.13 only, the following ECI
shareholders covenant and agree to vote in
favor of or consent to the Merger, and the
transactions contemplated herein:
Rodney M. Boucher, Gene Ameduri, and Energy
Fund II, LLC.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF ECI
ECI represents
and warrants to Microfield and Merger Sub that, except as
set forth in the Disclosure Schedules
(whether or not in a correspondingly
numbered section):
3.1 ORGANIZATION AND GOOD STANDING. ECI 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.
Except as set forth in Section 3.1 of the
Disclosure Schedules, ECI 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
on ECI. ECI 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 Closing Date, the outstanding ECI
Stock
and the holders thereof will be as set
forth in Section 3.2 of the Disclosure
Schedules. As of the Closing Date, all
issued and outstanding ECI Stock will be
duly authorized, validly issued, fully paid
and non-assessable. 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 ECI Stock or any other security of
ECI, and there is no authorized or
outstanding security of any kind
convertible into or exchangeable for any ECI
Stock or other security. Except as
disclosed in Section 3.2 of the Disclosure
Schedules, there are no obligations,
contingent or otherwise, of ECI to
repurchase, redeem or otherwise acquire any
ECI 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 INTELLECTUAL PROPERTY. ECI has filed U.S. Application Serial
No.
11/107,222 titled "Enterprise Energy
Automation" with the United States Patent
and Trademark Office with a filing date of
April 15, 2005.
3.4 CUSTOMERS. ECI's customers are as follows: (1) PJM
Interconnection, L.L.P., and (2) Developers
Diversified Realty Corporation.
There have not been any changes in the
business relationships of ECI with its
aforementioned customers that would
constitute a Material Adverse Effect on ECI,
other than completion of contracted work in
the normal course of business.
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<PAGE>
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF MICROFIELD AND MERGER SUB
Microfield and
Merger Sub jointly and severally represent and warrant to
ECI that, except as set forth in the
Disclosure Schedules (whether or not in a
correspondingly numbered section):
4.1 ORGANIZATION AND GOOD STANDING. Microfield and each of its
Subsidiaries is a corporation duly
organized and validly existing under the laws
of the jurisdiction of its incorporation
and is duly organized to do business in
each domestic or foreign jurisdiction in
which the failure to be so qualified is
reasonably likely to have a Material
Adverse Effect on it, and each such entity
has all requisite corporate power and
authority to own, lease and operate its
properties and to carry on its business as
now being conducted. Microfield and
Merger Sub have each delivered to ECI
accurate and complete copies of its
Articles of Incorporation and Bylaws, as
currently in effect.
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 October 3, 2005, (i)
21,150,801 shares of Microfield Common
Stock were issued and outstanding (ii)
6,642,865 shares of Series 2 Preferred
Shares were issued and outstanding, (iii)
3,602.709 shares of Series 3 Preferred
Shares were issued and outstanding, (iv)
4,392.105 shares of Series 4 Preferred
Shares were issued and outstanding, (v)
3,176,825 shares of Microfield Common Stock
were reserved for future issuance
pursuant to outstanding options to purchase
Microfield Common Stock, (vi)
7,734,363 shares of Microfield Common Stock
are available for issuance pursuant
to the 2004 Stock Incentive Plan, as
amended; and (vii) 5,252,372 shares of
Microfield Common Stock were reserved for
future issuance upon exercise of
warrants to purchase Microfield Common
Stock. Microfield is currently engaged in
a private placement offering in which it
will issue up to 6,428,571 shares of
Microfield Common Stock and stock purchase
warrant agreements to purchase up to
3,214,285 shares of Microfield Common Stock
with an exercise price of $0.90 per
share. No other capital stock or rights to
acquire such capital stock of
Microfield are authorized, issued, or
outstanding. The outstanding shares of
Microfield capital stock are, and the
shares of Microfield Common Stock to be
issued to the holders of record of ECI
Stock in the Merger will be, duly
authorized, validly issued, fully paid and
nonassessable, and not subject to
preemptive rights.
4.3 SEC REPORTS. To the Knowledge of Microfield and Merger Sub,
except
as disclosed in Section 4.3 of the
Disclosure Schedules, all registration
statements, reports and proxy statements,
including amendments thereto, filed by
Microfield with the SEC since December 31,
2002, and prior to the date of this
Agreement, as of the date filed (A)
complied in all material respects as to form
with the applicable requirements under the
Securities Act and the Securities
Exchange Act of 1934, as the case may be,
and the rules and regulations of the
SEC promulgated thereunder, and (B) did not
contain any untrue statement of a
material fact or omit to state a material
fact required to be stated therein or
necessary to make the statements therein,
in the light of the circumstances
under which they were made, not
misleading.
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ARTICLE 5.
ADDITIONAL COVENANTS OF ECI
ECI covenants
and agrees as follows:
5.1 CONDUCT OF BUSINESS OF ECI.
(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) ECI shall
conduct its business in the ordinary course
and consistent with past practice,
and ECI 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
ECI with Persons with whom ECI does
significant business and (ii) without
limiting the generality of the foregoing,
ECI 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 ECI, or any options, warrants,
commitments, subscriptions or rights
of any kind to acquire or sell any equity
interests in or other securities of
ECI, including, but not limited to, any
securities convertible into or
exchangeable for equity interests in
ECI;
(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,
issue any debt securities or make any loans
or advances, in each instance in
excess of $25,000, except in the ordinary
course of business;
(v) Sell, pledge, dispose of or encumber any assets of ECI,
except in the ordinary course of
business;
(vi) Authorize any capital expenditures or purchases of
fixed assets in excess of $25,000, except
in the ordinary course of business;
(vii) Assume, guarantee or endorse or otherwise as an
accommodation become respo
