Document:

Exhibit 10.9

 

SECOND
AMENDMENT TO

LIFE
INSURANCE

ENDORSEMENT
METHOD SPLIT DOLLAR PLAN

AGREEMENT

 

THIS
SECOND AMENDMENT TO THE LIFE INSURANCE ENDORSEMENT METHOD SPLIT DOLLAR PLAN
AGREEMENT (the “Second
Amendment”) is entered into as of March 19, 2008 between Paul G. Moerman
(the “Insured”)and Santa Lucia Bank, a banking company organized under the laws
of California, (the “Bank”) located in Atascadero, California.

 

WHEREAS, the Insured and the Bank entered into
the Life Insurance Endorsement Method Split Dollar Plan Agreement (the “Agreement”)
dated January 21, 1997, as amended;

 

WHEREAS, the Insured and the Bank have agreed to
amend the Agreement to avoid certain adverse accounting implications presented
by the current form of Agreement;

 

NOW,
THEREFORE, for
good and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the Insured and the Bank hereto agree as follows:

 

1.     Paragraph IV of the Agreement is hereby amended and
restated in its entirety to read as follows:

 

IV. PREMIUM
PAYMENT METHOD AND BANK’S DUE DILIGENCE

 

Subject to the following,
the Bank shall pay an amount equal to the planned premiums and any other
premium payments that might become necessary to keep the policy in force.  The Bank shall exercise due diligence in
reviewing the financial stability of the insurance company and the policy that
are the subject of this Agreement.  If
the Bank believes that the Insurer under the policy is financially weak or that
the policy is not performing well, the Bank may, at any time, surrender the
policy or substitute a different policy provided that the Bank is under no
obligation to invest in such replacement policy any more than the proceeds
available from the cash surrender value of the original policy.  The Insured will cooperate by undertaking any
necessary medical examination. The Bank
may sell, surrender or transfer ownership of the policy to the Insurer or any
third party, provided that, in the event of any such sale, surrender or
transfer prior to termination of this Agreement, the Bank replaces the policy
with a life insurance policy or policies on the life of the Insured providing
death benefits that are at least as much as that of the policy being replaced.
The rights, duties and benefits of the Bank or the Insured with respect to any
such replacement policy shall be subject to the terms of this Agreement. At the
request of the Bank, the Insured shall take any and all actions that the Bank
determines may be reasonably necessary for the sale, surrender or transfer of the
policy, the issuance of a replacement policy(ies), and subjecting the
replacement policy(ies) to the terms of this Agreement.

 

2.     Capitalized terms used herein and not otherwise
defined shall have the same meaning as set forth in the Agreement.

 

3.     This Second Amendment may be entered into in one or
more counterparts, all of which shall be considered one and the same
instrument, and it shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.

 

 

4.     Except as expressly modified herein, the terms of the
Agreement are confirmed.

 

Executed at Atascadero, California as of the date set
forth above.

 

	
   

  	
   

  	
   

  	
  Bank:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Santa Lucia Bank

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ John C. Hansen

  	
   

  	
   /s/ Larry H. Putnam

  
	
  Witness

  	
   

  	
  Name: Larry H. Putnam

  
	
   

  	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Insured:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ John C. Hansen

  	
   

  	
   /s/ Paul G. Moerman

  
	
  Witness

  	
   

  	
  Paul G. MoermanExhibit 10.10

 

SECOND
AMENDMENT TO

LIFE
INSURANCE

ENDORSEMENT
METHOD SPLIT DOLLAR PLAN

AGREEMENT

 

THIS
SECOND AMENDMENT TO THE LIFE INSURANCE ENDORSEMENT METHOD SPLIT DOLLAR PLAN
AGREEMENT (the “Second
Amendment”) is entered into as of March 19, 2008 between D. Jack
Stinchfield (the “Insured”)and Santa Lucia Bank, a banking company organized
under the laws of California, (the “Bank”) located in Atascadero, California.

 

WHEREAS, the Insured and the Bank entered into
the Life Insurance Endorsement Method Split Dollar Plan Agreement (the “Agreement”)
dated January 21, 1997, as amended;

 

WHEREAS, the Insured and the Bank have agreed to
amend the Agreement to avoid certain adverse accounting implications presented
by the current form of Agreement;

 

NOW,
THEREFORE, for
good and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the Insured and the Bank hereto agree as follows:

 

1.     Paragraph IV of the Agreement is hereby amended and
restated in its entirety to read as follows:

 

IV. PREMIUM
PAYMENT METHOD AND BANK’S DUE DILIGENCE

 

Subject to the following,
the Bank shall pay an amount equal to the planned premiums and any other
premium payments that might become necessary to keep the policy in force.  The Bank shall exercise due diligence in
reviewing the financial stability of the insurance company and the policy that
are the subject of this Agreement.  If
the Bank believes that the Insurer under the policy is financially weak or that
the policy is not performing well, the Bank may, at any time, surrender the
policy or substitute a different policy provided that the Bank is under no
obligation to invest in such replacement policy any more than the proceeds
available from the cash surrender value of the original policy.  The Insured will cooperate by undertaking any
necessary medical examination. The Bank
may sell, surrender or transfer ownership of the policy to the Insurer or any
third party, provided that, in the event of any such sale, surrender or
transfer prior to termination of this Agreement, the Bank replaces the policy
with a life insurance policy or policies on the life of the Insured providing
death benefits that are at least as much as that of the policy being replaced.
The rights, duties and benefits of the Bank or the Insured with respect to any
such replacement policy shall be subject to the terms of this Agreement. At the
request of the Bank, the Insured shall take any and all actions that the Bank
determines may be reasonably necessary for the sale, surrender or transfer of
the policy, the issuance of a replacement policy(ies), and subjecting the
replacement policy(ies) to the terms of this Agreement.

 

2.     Capitalized terms used herein and not otherwise
defined shall have the same meaning as set forth in the Agreement.

 

3.     This Second Amendment may be entered into in one or
more counterparts, all of which shall be considered one and the same
instrument, and it shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.

 

 

4.     Except as expressly modified herein, the terms of the
Agreement are confirmed.

 

Executed at Atascadero,
California as of the date set forth above.

 

	
   

  	
   

  	
   

  	
  Bank:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Santa Lucia Bank

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ John C. Hansen

  	
   

  	
   /s/ Larry H. Putnam

  
	
  Witness

  	
   

  	
  Name: Larry H. Putnam

  
	
   

  	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Insured:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ John C. Hansen

  	
   

  	
   /s/ Jack Stinchfield

  
	
  Witness

  	
   

  	
  D. Jack StinchfieldExhibit
4.1

 

NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

	
   

  	
  May 7, 2008

  	
  W-

  

 

COMMON STOCK PURCHASE WARRANT

 

To Purchase             
Shares of Common Stock of

 

MICROFIELD GROUP, INC.

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies
that, for value received,                       
(the “Holder”), is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth, at any time
on or after the date hereof (the “Initial Exercise Date”) and on or
prior to the close of business on the fifth anniversary of the Initial Exercise
Date (the “Termination Date”) but not thereafter, to subscribe for and
purchase from Microfield Group, Inc., an Oregon corporation (the “Company”),
up to            shares (the “Warrant
Shares”) of Common Stock, no par value, of the Company (the “Common
Stock”).  The purchase price of one
share of Common Stock under this Warrant shall be equal to the Exercise Price,
as defined in Section 2(b).

 

Section 1.                                            Definitions.  Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that certain Securities
Purchase Agreement (the “Purchase Agreement”), dated May 7, 2008,
among the Company and the purchasers signatory thereto.

 

Section 2.                                            Exercise.

 

a)                                      Exercise
of Warrant.  Exercise of the purchase
rights represented by this Warrant may be made at any time or times on or after
the Initial Exercise Date and on or before the Termination Date by delivery to
the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed
hereto (or such other office or agency of the Company as it may designate by
notice in writing to the registered Holder at the address of such Holder
appearing on the books of the Company); provided, however, within
5 Trading Days of the date said Notice of Exercise is delivered to the Company,
the Holder shall have surrendered this Warrant to the Company and the Company
shall have received  payment of the
aggregate Exercise Price of the shares thereby purchased 

 

 

by wire transfer or cashier’s
check drawn on a United States bank (unless exercised by means of a cashless
exercise).

 

b)                                     Exercise Price.  The exercise price of the Common Stock under
this Warrant shall be $0.60, subject to adjustment hereunder (the “Exercise
Price”).

 

c)                                      Payment
of Exercise Price.  The Holder may pay
the Exercise Price in one of the following manners:

 

i.                  Cash
Exercise.  The Holder may deliver
immediately available funds; or

 

ii.               Cashless
Exercise.  If an Exercise Notice is
delivered at a time when (i) a registration statement covering the
issuance and sale of all of the Warrant Shares issuable under this Warrant
(without giving effect to any restrictions on such exercise contained herein)
is not effective and available for such issuance and sale, and (ii) the
Fair Market Value is greater than the Exercise Price, then the Holder may
notify the Company in an Exercise Notice of its election to utilize cashless
exercise, in which event the Company shall issue to the Holder the number of
Warrant Shares determined as follows:

 

	
   

  	
  X = Y [(A - B)/A]

  
	
   

  
	
   

  	
  where:

  
	
   

  
	
   

  	
  X = the number of
  Warrant Shares to be issued to the Holder.

  
	
   

  
	
   

  	
  Y = the number of
  Warrant Shares with respect to which this Warrant is being exercised.

  
	
   

  
	
   

  	
  A = the Fair Market
  Value

  
	
   

  
	
   

  	
  B = the Exercise Price.

  

 

For purposes hereof, “Fair Market Value”
shall equal the closing price for the Trading Day immediately prior to (but not
including) the Exercise Date; provided that if the stock is not then trading,
then Fair Market Value shall be an amount determined in such reasonable manner
as may be prescribed by the Board of Directors of the Company.

 

 

d)                                     Holder’s
Restrictions.  The Holder shall not
have the right to exercise any portion of this Warrant, pursuant to Section 2(a) or
otherwise, to the extent that after giving effect to such issuance after exercise,
the Holder (together with the Holder’s affiliates), as set forth on the
applicable Notice of Exercise, would beneficially own in excess of 9.99% of the
number of shares of the Common Stock outstanding immediately after giving
effect to such issuance.  For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its
affiliates shall include the number of shares of Common Stock issuable upon
exercise of this Warrant and any other security of the Company convertible into
Common Stock with respect to which the determination of such sentence is being
made.  Except as set forth in the preceding sentence, for purposes of this
Section 2(d), beneficial ownership shall be calculated in accordance with Section 13(d) of
the Exchange Act, it being acknowledged by Holder that the Company is not
representing to Holder that such calculation is in compliance with Section 13(d) of
the Exchange Act and Holder is solely responsible for any schedules required to
be filed in accordance therewith.   To
the extent that the limitation contained in this Section 2(d) applies,
the determination of whether this Warrant is exercisable (in relation to other
securities owned by the Holder) and of which portion of this Warrant is exercisable
shall be in the sole discretion of such Holder, and the submission of a Notice
of Exercise shall be deemed to be such Holder’s determination of whether this
Warrant is exercisable (in relation to other securities owned by such Holder)
and of which portion of this Warrant is exercisable, in each case subject to
such aggregate percentage limitation, and the Company shall have no obligation
to verify or confirm the accuracy of such determination.  For purposes of this Section 2(d), in
determining the number of outstanding shares of Common Stock, the Holder may
rely on the number of outstanding shares of Common Stock as reflected in (x) the
Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a
more recent public announcement by the Company or (z) any other notice by
the Company or the Company’s Transfer Agent setting forth the number of shares
of Common Stock outstanding.  Upon the written or oral request of the
Holder, the Company shall within two Trading Days confirm orally and in writing
to the Holder the number of shares of Common Stock then outstanding.  In
any case, the number of outstanding shares of Common Stock shall be determined
after giving effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its affiliates since the date as of
which such number of outstanding shares of Common Stock was reported.  The provisions of this Section 2(d) may
be waived by the Holder upon, at the election of the Holder, not less than 61
days’ prior notice to the Company, and the provisions of this Section 2(d) shall
continue to apply until such 61st day (or such later date, as
determined by the Holder, as may be specified in such notice of waiver).

 

e)                                      Mechanics
of Exercise.

 

i.                  Authorization
of Warrant Shares.  The Company
covenants that all Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of the purchase
rights represented by this Warrant, be duly authorized, validly issued, fully
paid and nonassessable and free from all taxes, liens and charges in respect of
the issue thereof (other than taxes in respect of any 

 

 

transfer occurring
contemporaneously with such issue).  The
Company covenants that during the period the Warrant is outstanding, it will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant. 
The Company further covenants that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates
for the Warrant Shares upon the exercise of the purchase rights under this
Warrant.  The Company will take all such
reasonable action as may be necessary to assure that such Warrant Shares may be
issued as provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon which the Common
Stock may be listed.

 

ii.               Delivery
of Certificates Upon Exercise.  Certificates for shares purchased hereunder
shall be transmitted by the transfer agent of the Company to the Holder by
crediting the account of the Holder’s prime broker with the Depository Trust
Company through its Deposit Withdrawal Agent Commission (“DWAC”) system
if the Company is a participant in such system, and otherwise by physical
delivery to the address specified by the Holder in the Notice of Exercise within
3 Trading Days from the delivery to the Company of the Notice of Exercise Form,
surrender of this Warrant and payment of the aggregate Exercise Price as set
forth above (unless exercised by means of a cashless exercise) (“Warrant
Share Delivery Date”).  This Warrant
shall be deemed to have been exercised on the date the Exercise Price is
received by the Company (or in the case of a cashless exercise, the date this
Warrant is surrendered).  The Warrant
Shares shall be deemed to have been issued, and Holder or any other person so
designated to be named therein shall be deemed to have become a holder of
record of such shares for all purposes, as of the date the Warrant has been
exercised by payment to the Company of the Exercise Price (or in the case of a
cashless exercise, the date this Warrant is surrendered) and all taxes required
to be paid by the Holder, if any, prior to the issuance of such shares, have
been paid irrespective of the date such Warrant Shares are credited to the
Holder’s DWAC account, or the date of delivery of certificates evidencing the
Warrant Shares, as the case may be.

 

iii.            Delivery
of New Warrants Upon Exercise.  If this Warrant shall have been exercised in
part, the Company shall, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased Warrant Shares called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant.

 

iv.           No
Fractional Shares or Scrip.  No
fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this 

 

 

Warrant.  As to any fraction of a share which Holder
would otherwise be entitled to purchase upon such exercise, the Company shall
pay a cash adjustment in respect of such final fraction in an amount equal to
such fraction multiplied by the Exercise Price.

 

v.              Charges,
Taxes and Expenses.  Issuance of
certificates for Warrant Shares shall be made without charge to the Holder for
any issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall be paid by
the Company, and such certificates shall be issued in the name of the Holder or
in such name or names as may be directed by the Holder; provided, however,
that in the event certificates for Warrant Shares are to be issued in a name
other than the name of the Holder, this Warrant when surrendered for exercise
shall be accompanied by the Assignment Form attached hereto duly executed
by the Holder; and the Company may require, as a condition thereto, the payment
of a sum sufficient to reimburse it for any transfer tax incidental thereto.

 

vi.           Closing
of Books.  The Company will not close
its stockholder books or records in any manner which prevents the timely
exercise of this Warrant, pursuant to the terms hereof.

 

Section 3.                                            Certain Adjustments.

 

a)                                      Stock
Dividends and Splits. If the Company, at any time while this Warrant is
outstanding: (A) pays a stock dividend or otherwise make a distribution or
distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock (which, for avoidance
of doubt, shall not include any shares of Common Stock issued by the Company
pursuant to this Warrant), (B) subdivides outstanding shares of Common
Stock into a larger number of shares, (C) combines (including by way of
reverse stock split) outstanding shares of Common Stock into a smaller number
of shares, or (D) issues by reclassification of shares of the Common Stock
any shares of capital stock of the Company, then in each case the Exercise
Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if any)
outstanding before such event and of which the denominator shall be the number
of shares of Common Stock outstanding after such event and the number of shares
issuable upon exercise of this Warrant shall be proportionately adjusted.  Any adjustment made pursuant to this Section 3(a) shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or re-classification.

 

b)                                     Pro
Rata Distributions.  If the Company,
at any time prior to the Termination Date, shall declare, or distribute any
dividend or other distribution to all holders of Common Stock (and not to
Holders of the Warrants) evidences of its indebtedness or assets (or rights to
acquire assets) or rights or warrants to subscribe for or 

 

 

purchase any security other than the Common Stock, then in each such
case the Exercise Price shall be adjusted by multiplying the Exercise Price in
effect immediately prior to the record date fixed for determination of
stockholders entitled to receive such distribution by a fraction of which the
denominator shall be the VWAP determined as of the record date mentioned above,
and of which the numerator shall be such VWAP on such record date less the then
per share fair market value at such record date of the portion of such assets
or evidence of indebtedness so distributed applicable to one outstanding share
of the Common Stock as determined by the Board of Directors in good faith.  In either case the adjustments shall be
described in a statement provided to the Holders of the portion of assets or
evidences of indebtedness so distributed or such subscription rights applicable
to one share of Common Stock.  Such
adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date mentioned above.

 

c)                                      Calculations.
All calculations under this Section 3 shall be made to the nearest cent or
the nearest 1/100th of a share, as the case may be. The number of shares of
Common Stock outstanding at any given time shall not includes shares of Common
Stock owned or held by or for the account of the Company, and the description
of any such shares of Common Stock shall be considered on issue or sale of
Common Stock.  For purposes of this Section 3,
the number of shares of Common Stock deemed to be issued and outstanding as of
a given date shall be the sum of the number of shares of Common Stock
(excluding treasury shares, if any) issued and outstanding.

 

d)                                     Notice
to Holders.

 

i.                  Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted pursuant to this
Section 3, the Company shall promptly mail to each Holder a notice setting
forth the Exercise Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.

 

ii.               Notice
to Allow Exercise by Holder. If (A) the Company shall declare a
dividend (or any other distribution) on the Common Stock; (B) the Company
shall declare a special nonrecurring cash dividend on or a redemption of the
Common Stock; (C) the Company shall authorize the granting to all holders
of the Common Stock rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights; (D) the approval of any
stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, of any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property; (E) the
Company shall authorize the voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the Company; then, in each case, the Company
shall cause to be mailed to the Holder at its last addresses as it shall appear
upon the Warrant Register of the Company, at least 10 calendar days prior to
the applicable record or effective date hereinafter specified, a notice stating

 

 

(x) the date on which a record is to be taken for
the purpose of such dividend, distribution, redemption, rights or warrants, or
if a record is not to be taken, the date as of which the holders of the Common
Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or share exchange is
expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their
shares of the Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer or share
exchange; provided, that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.  The Holder is entitled to exercise this
Warrant during the 10-day period commencing the date of such notice to the
effective date of the event triggering such notice.

 

e)                                      Reorganizations, Etc.  In case,
at any time during the Exercise Period, of any capital reorganization, of any
reclassification of the stock of the Company (other than a change in par value
or from par value to no par value or from no par value to par value or as a
result of a stock dividend or subdivision, split-up or combination of shares),
or the consolidation or merger of the Company with or into another corporation
(other than a consolidation or merger in which the Company is the continuing
operation and which does not result in any change or reclassification in the
Warrant Shares) or of the sale of all or substantially all the properties and
assets of the Company as an entirety to any other corporation, the Company, at
its sole discretion, shall have the right and option to (A) provide 10
days prior written notice of such event to the Holder and this Warrant shall
terminate and be of no further force and effect on and after the effective date
of such capital reorganization or reclassification or the consummation of such
consolidation, sale or merger; or (B) provide that this Warrant shall,
after such reorganization, reclassification, consolidation, merger or sale, be
exercisable for the kind and number of shares of stock or other securities or
property of the Company or of the corporation resulting from such consolidation
or surviving such merger or to which such properties and assets shall have been
sold to which such holder would have been entitled if he, she or it had held
the Warrant Shares issuable upon the exercise hereof immediately prior to such
reorganization, reclassification, consolidation, merger or sale.

 

f)                                        Voluntary
Adjustment By Company. The Company may at any time
during the term of this Warrant reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the Board of Directors
of the Company.

 

Section 4.                                            Transfer of Warrant.

 

a)                                      Transferability.  Subject to compliance with any applicable
securities laws and the conditions set forth in Sections 5(a) and 4(d) hereof
and to the provisions of Section 4.1 of the Purchase Agreement, this
Warrant and all rights hereunder are transferable, in whole or in part, upon
surrender of this Warrant at the principal office of 

 

 

the Company, together with a written assignment of this Warrant
substantially in the form attached hereto duly executed by the Holder or its
agent or attorney and funds sufficient to pay any transfer taxes payable upon
the making of such transfer.  Upon such
surrender and, if required, such payment, the Company shall execute and deliver
a new Warrant or Warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of assignment, and
shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be cancelled.  A Warrant, if properly assigned, may be
exercised by a new holder for the purchase of Warrant Shares without having a
new Warrant issued.

 

b)                                     New
Warrants. This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 4(a),
as to any transfer which may be involved in such division or combination, the
Company shall execute and deliver a new Warrant or Warrants in exchange for the
Warrant or Warrants to be divided or combined in accordance with such notice.

 

c)                                      Warrant
Register. The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the “Warrant Register”), in
the name of the record Holder hereof from time to time.  The Company may deem and treat the registered
Holder of this Warrant as the absolute owner hereof for the purpose of any
exercise hereof or any distribution to the Holder, and for all other purposes,
absent actual notice to the contrary.

 

d)                                     Transfer
Restrictions. If, at the time of the surrender of this Warrant in
connection with any transfer of this Warrant, the transfer of this Warrant
shall not be registered pursuant to an effective registration statement under
the Securities Act and under applicable state securities or blue sky laws, the
Company may require, as a condition of allowing such transfer (i) that the
Holder or transferee of this Warrant, as the case may be, furnish to the
Company a written opinion of counsel (which opinion shall be in form, substance
and scope customary for opinions of counsel in comparable transactions) to the
effect that such transfer may be made without registration under the Securities
Act and under applicable state securities or blue sky laws, (ii) that the
holder or transferee execute and deliver to the Company an investment letter in
form and substance acceptable to the Company and (iii) that the transferee
be an “accredited investor” as defined in Rule 501(a)(1),

(a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the Securities Act or
a qualified institutional buyer as defined in Rule

144A(a) under the Securities Act.

 

Section 5.                                            Miscellaneous.

 

a)                                      Title
to Warrant.  Prior to the Termination
Date and subject to compliance with applicable laws and Section 4 of this
Warrant, this Warrant and all rights hereunder are transferable, in whole or in
part, at the office or agency of the Company by the Holder in person or by duly
authorized attorney, upon surrender of this Warrant together with the
Assignment Form annexed hereto properly endorsed.  The transferee shall sign an investment
letter in form and substance reasonably satisfactory to the Company.

 

 

b)                                     No
Rights as Shareholder Until Exercise.  This Warrant does not entitle the Holder to
any voting rights or other rights as a shareholder of the Company prior to the
exercise hereof.  Upon the surrender of
this Warrant and the payment of the aggregate Exercise Price (or by means of a
cashless exercise), the Warrant Shares so purchased shall be and be deemed to
be issued to such Holder as the record owner of such shares as of the close of
business on the later of the date of such surrender or payment.

 

c)                                      Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that
upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant or any stock certificate
relating to the Warrant Shares, and in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to it (which, in the case of the
Warrant, shall not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the Company
will make and deliver a new Warrant or stock certificate of like tenor and
dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

d)                                     Saturdays,
Sundays, Holidays, etc.  If the last
or appointed day for the taking of any action or the expiration of any right
required or granted herein shall be a Saturday, Sunday or a legal holiday, then
such action may be taken or such right may be exercised on the next succeeding
day not a Saturday, Sunday or legal holiday.

 

e)                                      Authorized
Shares.

 

The
Company covenants that during the period the Warrant is outstanding, it will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant. 
The Company further covenants that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates
for the Warrant Shares upon the exercise of the purchase rights under this
Warrant.  The Company will take all such
reasonable action as may be necessary to assure that such Warrant Shares may be
issued as provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon which the Common
Stock may be listed.

 

Except
and to the extent as waived or consented to by the Holder, the Company shall
not by any action, including, without limitation, amending its certificate of
incorporation, bylaws or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, and will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder as set forth in this
Warrant against impairment.  Without
limiting the generality of the foregoing, the Company will (a) not
increase the par value of any Warrant Shares receivable upon exercise of 

 

 

this Warrant above
the Exercise Price then in effect, (b) take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable Warrant Shares upon the exercise of this
Warrant, and (c) use commercially reasonable efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Warrant.

 

Before
taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having jurisdiction
thereof.

 

f)                                        Jurisdiction.
All questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be determined in accordance with the
provisions of the Purchase Agreement.

 

g)                                     Restrictions.  The Holder acknowledges that the Warrant
Shares acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws.

 

h)                                     Nonwaiver
and Expenses.  No course of dealing
or any delay or failure to exercise any right hereunder on the part of Holder
shall operate as a waiver of such right or otherwise prejudice Holder’s rights,
powers or remedies, notwithstanding the fact that all rights hereunder
terminate on the Termination Date.  If
the Company willfully and knowingly fails to comply with any provision of this
Warrant, which results in any material damages to the Holder, the Company shall
pay to Holder such amounts as shall be sufficient to cover any costs and
expenses including, but not limited to, reasonable attorneys’ fees, including
those of appellate proceedings, incurred by Holder in collecting any amounts
due pursuant hereto or in otherwise enforcing any of its rights, powers or
remedies hereunder.

 

i)                                         Notices.  Any notice, request or other document
required or permitted to be given or delivered to the Holder by the Company
shall be delivered in accordance with the notice provisions of the Purchase
Agreement.

 

j)                                         Limitation
of Liability.  No provision hereof,
in the absence of any affirmative action by Holder to exercise this Warrant or
purchase Warrant Shares, and no enumeration herein of the rights or privileges
of Holder, shall give rise to any liability of Holder for the purchase price of
any Common Stock or as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.

 

k)                                      Remedies.  Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the 

 

 

provisions of this Warrant and
hereby agrees to waive the defense in any action for specific performance that
a remedy at law would be adequate.

 

l)              Successors
and Assigns.  Subject to applicable
securities laws, this Warrant and the rights and obligations evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company
and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended
to be for the benefit of all Holders from time to time of this Warrant and
shall be enforceable by any such Holder or holder of Warrant Shares.

 

m)            Amendment.  This Warrant may be modified or amended or
the provisions hereof waived with the written consent of the Company and the
Holder.

 

n)            Severability.  Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.

 

o)            Headings.  The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.

 

********************

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized.

 

 

Dated:  May 7, 2008

 

 

	
   

  	
  MICROFIELD GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

NOTICE OF EXERCISE

 

TO:                            MICROFIELD GROUP, INC.

 

(1)          The undersigned hereby
elects to purchase                 
Warrant Shares of the Company pursuant to the terms of the attached Warrant
(only if exercised in full), and tenders herewith payment of the exercise price
in full, together with all applicable transfer taxes, if any.

 

(2)          The Holder intends that
payment of the Exercise Price shall be made as (check one):

 

	
  o

  	
  Cash Exercise. The undersigned has paid or delivered to
  the Company $                    ,
  the aggregate Exercise Price for                       
  shares of the Company’s Common Stock purchased herewith, in full in cash or
  by certified or official bank check or wire transfer.

  
	
   

  	
   

  
	
  o

  	
  Cashless Exercise. In exchange for the issuance of               
  shares of the Company’s Common Stock, the undersigned hereby agrees to
  surrender the right to purchase               
  shares of Common Stock pursuant to the cashless exercise provisions set forth
  in  Section 2(c) of
  the Warrant.

  

 

(3)          Please issue a
certificate or certificates representing said Warrant Shares in the name of the
undersigned or in such other name as is specified below:

 

 

The Warrant Shares shall
be delivered to the following:

 

 

(4)  Accredited
Investor.  The undersigned is an “accredited
investor” as defined in Regulation D promulgated under the Securities Act of
1933, as amended.

 

	
  [SIGNATURE OF HOLDER]

  	
   

  
	
   

  	
   

  
	
  Name of
  Investing Entity:

  	
   

  
	
  Signature
  of Authorized Signatory of Investing Entity:

  	
   

  
	
  Name of
  Authorized Signatory:

  	
   

  
	
  Title of
  Authorized Signatory:

  	
   

  
	
  Date:

  	
   

  
						

 

 

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute

this form and supply required information. 

Do not use this form to exercise the warrant.)

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to

 

 

                                                                                              
whose address is

 

                                                                                                                              .

 

 

Dated:                              ,         

 

 

Holder’s
Signature:                                                                     

 

Holder’s Address:                                                                       

 

                                                                        

 

 

Signature Guaranteed:                                                                                      

 

 

NOTE:  The signature to this Assignment Form must
correspond with the name as it appears on the face of the Warrant, without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank or trust company.  Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.

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