AGREEMENT TO CONSOLIDATE, AMEND
AND SATISFY OBLIGATIONS
This Agreement to Consolidate, Amend and Satisfy Obligations (this
"Agreement") is entered into effective September 15, 2003, between Xxxxxxxxxxx
Technology Services, Inc. ("Maker"), Xxxxxxxxxxx Electric, Inc. ("Holder") and
Microfield Group, Inc. ("Microfield").
RECITALS
A. Maker has executed a promissory note evidencing an obligation
owed to Holder on June 1, 2003 in the amount of $1,500,000 (the "Note").
B. Maker and Holder are parties to an Inventory Transfer
Agreement dated August 1, 2002, wherein Maker agreed to pay $265,189.42 for
certain inventory to Holder (the "Transfer Agreement").
C. Maker and Holder wish to amend and restate the obligations due
from Maker to Holder and revise the payment schedule as more particularly
described below.
D. Maker is negotiating the terms of an Agreement and Plan of
Merger with Microfield and CTS Acquisition Co. ("Merger Agreement"), wherein CTS
Acquisition Co. will merge with and into Maker and Microfield will become the
sole shareholder of Maker.
NOW THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledges, the parties to this Agreement agree as
follows:
AGREEMENT
1. PRINCIPAL AND INTEREST. As of the date hereof, Maker owes
Holder under the terms of both the Note and the Transfer Agreement the total
principal amount of One Million Seven Hundred Sixty-five Thousand Dollars
($1,765,000).
2. PAYMENT AND CANCELLATION. Holder hereby agrees to convert
$365,000 of the amount set forth in Section 1 to 869,048 shares of Series 2
Preferred Common Stock of Microfield Group, Inc. Holder agrees that upon
issuance of the 869,048 shares of Series 2 Preferred Stock of Microfield Group,
Inc. to Holder all obligations as to $365,000 of the amount set forth in Section
1 will be fully paid and satisfied.
3. PROMISSORY NOTE. Maker and Holder agree that Maker shall
execute a Subordinated Amended and Restated Promissory Note in the remaining
amount due of $1,400,000 ("Note"). The Note shall have the following payment
terms:
3.1 The note will be amortized over a five year period.
3.2 Interest will accrue on the unpaid principal balance
at twelve percent (12%) per annum beginning November 15, 2003.
1 - AGREEMENT TO CONSOLIDATE, AMEND AND SATISFY OBLIGATIONS
PDX/112816/141153/DLH/1395247.1
3.3 Monthly payments of principal and accrued interest
will begin on November 15, 2003 with each subsequent payment due on the same day
of each month thereafter.
3.4 Any portion of the principal balance may be prepaid
at any time without penalty.
3.5 The entire balance of principal and accrued but
unpaid interest will be due on October 15, 2006.
4. NOTE CONVERSION. As of November 15, 2003, Microfield, which
shall become the sole shareholder of Maker as of the Effective Time, as defined
in the Merger Agreement, shall have the option to convert the remaining balance,
including principal and any accrued interest, of the Note to Series 2 Preferred
Stock of Microfield ("Preferred Stock"). In determining the amount of Preferred
Stock necessary to satisfy this obligation the balance due shall be divided by
$0.42 to equal the number of shares of Preferred Stock necessary to fully
satisfy the entire balance due pursuant to the terms of the Note. Holder agrees
to accept as payment in full of the Note the number of shares equal to the
entire balance due under the Note divided by $0.42. For example if no prepayment
is made the total number of shares of Preferred Stock necessary to pay the
outstanding balance due as of November 15, 2003, is 3,333,333. Microfield Group,
Inc. shall exercise such option by providing Holder notice of Microfield's
election to convert the outstanding amount due under the Note to Preferred
Stock.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
XXXXXXXXXXX ELECTRIC, INC. XXXXXXXXXXX TECHNOLOGY
SERVICES, INC.
By: /s/ XXXXXX XXXXXXX By: /s/ XXXXXX XXXXXXX
----------------------------------- ----------------------------------
Xxxxxx Xxxxxxx, President Xxxxxx Xxxxxxx, President
MICROFIELD GROUP, INC.
By: /s/ XXXXXX X. XXXXXX
-----------------------------------
Xxxxxx X. Xxxxxx, President
1 - AGREEMENT TO CONSOLIDATE, AMEND AND SATISFY OBLIGATIONS
PDX/112816/141153/DLH/1395247.1
