FORBEARANCE AGREEMENT
THIS FORBEARANCE AGREEMENT (the "Agreement") is entered into effective
February 28, 2005 between DESTINATION CAPITAL, LLC ("Lender"), XXXXXXXXXXX
VELAGIO, INC. ("Borrower") and MICROFIELD GROUP, INC. ("Guarantor").
RECITALS:
A. Borrower and Lender entered into a Business Loan Agreement
dated August 24, 2004 and amended effective October 1, 2004 (the "Loan
Agreement") whereby Lender agreed to provide a term loan credit facility to
Borrower. Pursuant to the terms of a Commercial Guaranty dated August 24, 2004,
Guarantor has unconditionally and absolutely guaranteed payment to Lender of the
Indebtedness of Borrower under the Loan Agreement.
B. Pursuant to the terms of the Loan Agreement and Related
Documents, Borrower is obligated to make monthly payments of interest to Lender.
Borrower has failed to make the payments due January 24, 2005 and February 24,
2005 in the amount of $15,542.47 each. The failure to make these payments
constitutes an Event of Default under the Loan Agreement and Related Documents.
C. Borrower, Guarantor and Lender desire to enter into this
Agreement in order to set forth the terms and conditions under which Lender will
forbear from immediately enforcing all of its available remedies against
Borrower and Guarantor.
D. Capitalized terms not otherwise defined herein shall have the
meanings assigned to them in the Loan Agreement.
AGREEMENT:
1. ACKNOWLEDGMENT AND REAFFIRMATION OF INDEBTEDNESS. Borrower and
Guarantor jointly and severally acknowledge, reaffirm and agree that they
unconditionally owe Lender the full amount of the Indebtedness under the Loan
Agreement and Related Documents without setoff, defense, counterclaim or claim
of recoupment of any kind whatsoever and that Borrower's prior grant of security
interests in the Collateral to Lender is valid, perfected and enforceable
without defense, counterclaim or claim of recoupment of any kind whatsoever.
2. ACKNOWLEDGMENT AND REAFFIRMATION OF GUARANTY. Guarantor
acknowledges, reaffirms and agrees that its guaranty is valid and enforceable
without setoff, defense, counterclaim or claim of recoupment of any kind
whatsoever and remains in full force and effect.
3. LENDER'S CONDITIONAL FORBEARANCE. Subject to the provisions of
this Agreement, Lender will conditionally forbear from immediately exercising
its rights and remedies against Borrower, Guarantor and the Collateral. Lender's
continued forbearance is and shall remain subject to Borrower's complete,
continuous and timely satisfaction of each of the following conditions:
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3.1 Borrower shall make the scheduled monthly payments of
interest only due March 24, 2005, April 24, 2005 and May 24, 2005 ($15,542.47
per month based on the current principal balance of the Loan).
3.2 On June 24, 2005, Borrower shall pay all accrued and
unpaid interest due to Lender through such date (i.e., the payments due January
24, 2005 and February 24, 2005) and, in addition, shall make the first of the 15
scheduled principal payments due on such date pursuant to the Loan Agreement.
3.3 Borrower shall fully and timely perform all of its
obligations to Lender under the Loan Agreement and Related Documents and under
any other agreements with Lender to which Borrower is a party (either now or in
the future).
3.4 Upon execution of this Agreement, Borrower shall pay
to Lender the sum of $1,000 to pay or reimburse Lender for Lender's fees, costs
and expenses incurred to date in connection with Borrower's default and this
Agreement.
Provided that Borrower satisfies these conditions, and so long as there is no
new Event of Default, interest shall accrue at the non-default rate specified in
the Promissory Note and Lender will waive late charges accrued to date as
specified in the Promissory Note.
4. STOCK WARRANT PRICING. Section 3(f) of the Loan Agreement
provides for Borrower's parent, Microfield, to issue a warrant or warrants (the
"Warrant") to Lender to purchase common shares of Microfield at an exercise
price of $0.38 per share or, if less, the price applicable to any shares,
warrants or options issued while the Loan is outstanding. Borrower agrees to
cause the terms of the Warrant to provide that, in the event Lender were to
subsequently convert all or any part of the Loan to stock of Microfield, the
conversion will be treated as an issuance of shares that might result in a
downward adjustment of the exercise price of the Warrant if the Loan conversion
rate is less than $0.38 per share.
5. NO WAIVER. Borrower and Guarantor acknowledge and agree that,
notwithstanding anything to the contrary contained herein, the terms of this
Agreement shall not serve to effect a novation as to the Loan Agreement or any
Related Document. Borrower and Guarantor further acknowledge and agree that
Lender has not waived any of its rights or remedies against or with respect to
Borrower or Guarantor or the Collateral, whether with respect to the existing
and continuing Events of Default referred to herein or otherwise, except as
otherwise expressly provided for in this Agreement.
6. FURTHER ASSURANCES. Upon Lender's written request, Borrower
and Guarantor, at their own expense and at any time, will promptly and duly
execute and deliver such further instruments and documents and take such further
actions as Lender may reasonably request for the purposes of obtaining or
preserving the full benefits of this Agreement and of the rights and powers
granted to Lender herein and under the terms of the Loan Agreement and Related
Documents.
7. EXPENSES. From and after the effective date of this Agreement,
within ten (10) business days after Lender's request, Borrower and Guarantor
jointly and severally agree to pay or reimburse Lender for all of Lender's costs
and expenses reasonably incurred in connection
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with the enforcement or preservation of any rights under the Indebtedness, this
Agreement, the Loan Agreement and any of the Related Documents including,
without limitation, fees and disbursements of Lender's outside or in-house
counsel.
8. NON-IMPAIRMENT. This Agreement is a revision only (i.e., an
amendment and modification of Borrower's existing payment obligations to Lender
under the Loan Agreement) and not a novation, and nothing contained herein shall
in any way impair the Loan Agreement or any of the Related Documents or alter,
waive annul, vary or affect any term, provision, condition, covenant, right,
power or remedy contained therein, it being the intent of Borrower, Guarantor
and Lender that the terms, provisions, conditions, covenants, rights, powers and
remedies contained in the Loan Agreement and the Related Documents shall
continue in full force and effect except as expressly modified by the terms of
this Agreement.
9. BINDING EFFECT. This Agreement shall be binding upon the
successors and permitted assigns of Borrower and Guarantor and shall inure to
the benefit of Lender and its successors and assigns.
10. ASSIGNMENT. Lender reserves the right to transfer or assign,
in its sole and absolute discretion, and without notice to or consent by or from
Borrower or Guarantor, any or all of the powers, rights, title and interests
held by Lender under this Agreement, the Loan Agreement and Related Documents,
or any other agreements between or among Lender, Borrower and Guarantor. This
Agreement, the Loan Agreement and Related Documents may not be assigned by
Borrower or Guarantor, by operation of law or otherwise, without Lender's prior
written consent and any attempted assignment without consent shall be void and
without effect.
11. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
Facsimile signatures shall be considered original signatures for purposes of
this Agreement.
12. STATUTORY WRITING REQUIREMENTS. UNDER OREGON LAW MOST
AGREEMENTS, PROMISES AND COMMITMENTS MADE BY LENDER CONCERNING LOANS AND OTHER
CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR
SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS
CONSIDERATION AND BE SIGNED BY LENDER TO BE ENFORCEABLE.
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IN WITNESS WHEREOF, the parties have executed this Agreement, or caused
their duly authorized representatives to execute this Agreement, as of the date
first above written.
LENDER: BORROWER:
DESTINATION CAPITAL, LLC XXXXXXXXXXX VELAGIO, INC.
By: JMW Capital Partners, Inc., its Manager
By: /s/ XXXXXX XXXXXXX By: /s/ XXXX XXXXXX
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Xxxxxx Xxxxxxx, CEO Xxxx Xxxxxx, CFO
GUARANTOR:
MICROFIELD GROUP, INC.
By: /s/ Xxxx Xxxxxx
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Xxxx Xxxxxx, CFO
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