STOCK PURCHASE WARRANT TO PURCHASE SHARES OF COMMON STOCK OF MICROFIELD GROUP, INC

 

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                                                                    EXHIBIT 99.2

 

THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN

REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS.

NEITHER THIS WARRANT NOR THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF MAY BE

SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE

REGISTRATION STATEMENT AS TO THE APPLICABLE SECURITIES UNDER SUCH ACT OR LAWS OR

AN OPINION OF COUNSEL FOR THE HOLDER REASONABLY SATISFACTORY TO THE ISSUER

STATING THAT SUCH REGISTRATION IS NOT REQUIRED.

 

No. 2005-W-<<No>>                                 WARRANT TO   PURCHASE <<Shares>>

                                                          SHARES OF COMMON STOCK

 

                             STOCK PURCHASE WARRANT

                       TO PURCHASE SHARES OF COMMON STOCK

                            OF MICROFIELD GROUP, INC.

 

      For value received, Microfield Group, Inc., an Oregon corporation (the

"Company"), grants to <<Name>> (the "Holder") the right, subject to the terms of

this Warrant, to purchase at any time during the period commencing on the

"Initial Exercise Date" (as defined below), and ending on the "Expiration Date"

(as defined below), <<Shares>> fully paid and nonassessable shares of Common

Stock of the Company at the "Exercise Price" (as defined below). This Warrant

may be exercised in whole or in part. The number of shares that may be purchased

is subject to adjustment under the terms of this Warrant.

 

Section 1. DEFINITIONS. As used in this Warrant, unless the context otherwise

requires:

 

      "COMMON STOCK" means the Common Stock of the Company.

 

      "COMPANY" has the meaning specified in the introductory paragraph.

 

      "EXERCISE AMOUNT" means the number of Warrant Shares filled in on the

attached Exercise Form delivered to the Company by the Holder in connection with

exercise of all or a portion of this Warrant.

 

      "EXERCISE DATE" means any date on which this Warrant is exercised in the

manner indicated in Sections 2.1 and 2.2.

 

      "EXERCISE PRICE" means $2.58 per share (adjusted as necessary in

accordance with Section 7).

 

      "EXPIRATION DATE" means 12:00 midnight (Portland time) on October 13,

2010.

 

      "HOLDER" has the meaning specified in the introductory paragraph.

 

      "INITIAL EXERCISE DATE" means October 13, 2005.

 

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      "PERSON" means an individual, corporation, partnership, trust, joint

venture or other form of business entity.

 

      "SECURITIES ACT" means the Securities Act of 1933, as amended from time to

time, and all rules and regulations promulgated thereunder, or any act, rules or

regulations which replace the Securities Act or any such rules and regulations.

 

      "WARRANT SHARES" means the shares of Common Stock issued or issuable upon

exercise of this Warrant, adjusted as necessary in accordance with Section 7.

 

Section 2. DURATION AND EXERCISE OF WARRANT.

 

      2.1 EXERCISE PERIOD. Subject to the provisions hereof, this Warrant may be

exercised at any time during the period commencing on the Initial Exercise Date

and ending on the Expiration Date for the Warrant Shares. After the Expiration

Date, this Warrant shall become void and all rights to purchase Warrant Shares

hereunder shall thereupon cease.

 

      2.2 METHODS OF EXERCISE. This Warrant may be exercised by the Holder, in

whole or in part, by (i) surrendering this Warrant to the Secretary of the

Company, (ii) payment of any applicable consideration, and (iii) executing and

delivering to the Secretary of the Company the attached Exercise Form, which

must select one of the following exercise methods, to be at the Holder's option:

 

            2.2.1 EXERCISE FOR CASH. If the Holder elects to exercise the right

to purchase Warrant Shares for cash, the Holder shall tender to the Company

payment in full by cash, check, or wire transfer of the Exercise Price for the

Exercise Amount.

 

            2.2.2 SAME DAY SALE EXERCISE. In lieu of exercising this Warrant by

payment of cash, when permitted by law and applicable regulations (including

Nasdaq and NASD rules), the Holder may pay the Exercise Price through a "same

day sale" commitment from the Holder and a broker-dealer that is a member of the

National Association of Securities Dealers (an "NASD Dealer") whereby the Holder

irrevocably elects to exercise the Warrant or portion thereof and to sell a

portion of the Warrant Shares so purchased to pay the Exercise Price and whereby

the NASD Dealer irrevocably commits upon receipt of such Warrant Shares to

forward the Exercise Price directly to the Company.

 

            2.2.3 NET EXERCISE. The Holder may elect to receive, without the

payment by the Holder of any additional consideration, shares of Common Stock

equal to the value of this Warrant by the surrender of this Warrant to the

Company with a written notice of exercise specifying reliance on this Section

2.2.3. Thereupon, the Company shall issue to the Holder such number of fully

paid and nonassessable shares of Common Stock as is computed using the following

formula:

                                X = Y (A-B)

                                    -------

                                       A

 

where        X = the number of shares to be issued to the Holder pursuant to this

                Section 2.3.

 

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            Y = the number of Warrant Shares underlying the Warrant

                the Holder elects to exercise pursuant to this Section

                2.2.3.

 

            A = the average closing ask price for one share of Common

                Stock for the 10 trading days preceding the day the net

                exercise election is made pursuant to this Section

                2.2.3.

 

            B = the Exercise Price in effect under this Warrant at

                the time the net exercise election is made pursuant to

                this Section 2.2.3.

 

      2.3 CERTIFICATES. As soon as practicable after exercise of this Warrant

(but in no event later than five business days), (a) certificates for Warrant

Shares shall be delivered, at the Company's expense, to the Holder or the

transferee thereof set forth in the attached Exercise Form and (b) a new Warrant

of like tenor to purchase up to that number, if any, not previously purchased by

the Holder (if this Warrant has not expired) shall be delivered, at the

Company's expense, to the Holder.

 

      2.4 EFFECTIVE DATE OF EXERCISE. This Warrant shall be deemed to have been

exercised immediately prior to the close of business on the date of its

surrender for exercise as provided above. The person entitled to receive the

Warrant Shares shall be treated for all purposes as the holder of record of such

shares as of the close of business on the date the Holder is deemed to have

exercised this Warrant.

 

      2.5 SECURITIES ACT COMPLIANCE. Unless the Warrant Shares are no longer

subject to Rule 144 under the Securities Act, the Company may place

conspicuously upon each certificate representing the Warrant Shares a legend

substantially in the following form, the terms of which are agreed to by the

Holder:

 

      THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED

      UNDER THE SECURITIES ACT OF 1933, AS AMENDED (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) STATING

      THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION OR (C) THE COMPANY

      OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM

      REGISTRATION.

 

      2.6 TAXES. The Company shall pay any tax and other governmental charges

which may be payable in respect of the issuance of the Warrant Shares, provided,

however, that in no case will the Company pay any taxes relating to income to

the Holder resulting from the issuance or exercise of this Warrant.

 

Section 3. WARRANT SHARES.

 

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      3.1 VALIDITY AND RESERVATION. The Company covenants that all Warrant

Shares issued upon exercise of this Warrant will be validly issued, fully paid,

nonassessable, free and clear of all liens, security interests, charges and

other encumbrances or restrictions on sale (except encumbrances or restrictions

arising under federal or state securities laws), and not subject to preemptive

rights. The Company agrees that, as long as this Warrant may be exercised, the

Company will have duly authorized and reserved for issuance upon exercise of

this Warrant a sufficient number of shares of Common Stock or other shares of

capital stock of the Company as are from time to time issuable upon exercise of

this Warrant and from time to time will take all steps necessary to amend its

Articles of Incorporation to provide sufficient reserves of Common Stock

issuable upon exercise of this Warrant. Issuance of this Warrant shall

constitute full authority to the Company's officers who are charged with the

duty of executing stock certificates to execute and issue the necessary

certificates for Common Stock upon the exercise of this Warrant.

 

      3.2 LISTING OF WARRANT SHARES. The Company shall take all steps necessary

to cause the Warrant Shares issuable upon exercise of this Warrant to be

approved for listing on all securities exchanges or markets and all trading or

quotation facilities, if any, on which the Common Stock is listed as soon as

possible after the Initial Exercise Date and shall use commercially reasonable

efforts to maintain such listings until the earlier of the Expiration Date or

the date this Warrant is exercised in full.

 

Section 4. FRACTIONAL SHARES.

 

      No fractional Warrant Shares shall be issued upon the exercise of this

Warrant, and the number of Warrant Shares to be issued shall be rounded to the

nearest whole number.

 

Section 5. LIMITED RIGHTS OF WARRANT HOLDER.

 

      The Holder shall not, solely by virtue of being the Holder of this

Warrant, have any of the rights of a shareholder of the Company, either at law

or equity, until this Warrant shall have been exercised.

 

Section 6. LOSS OF WARRANT.

 

      Upon receipt by the Company of satisfactory evidence of the loss, theft,

destruction or mutilation of this Warrant and either (in the case of loss, theft

or destruction) reasonable indemnification and a bond reasonably satisfactory to

the Company if requested by the Company or (in the case of mutilation) the

surrender of this Warrant for cancellation, the Company will execute and deliver

to the Holder, without charge, a new warrant of like denomination.

 

Section 7. CERTAIN ADJUSTMENTS.

 

      7.1 ADJUSTMENT OF WARRANT SHARES. The number, class and Exercise Price per

share of securities for which this Warrant may be exercised are subject to

adjustment from time to time upon the happening of certain events as hereinafter

provided:

 

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            (a) RECAPITALIZATION. If the outstanding shares of the Company's

Common Stock are divided into a greater number of shares or if the Company shall

effect a stock dividend, the number of shares of Common Stock purchasable upon

the exercise of this Warrant shall be proportionately increased and the Exercise

Price per share shall be proportionately reduced. Conversely, if the outstanding

shares of Common Stock are combined into a smaller number of shares of Common

Stock, the number of shares of Common Stock purchasable upon the exercise of

this Warrant shall be proportionately reduced and the Exercise Price per share

shall be proportionately increased. The increases and reductions provided for in

this Section 7.1(a) shall be made with the intent and, as nearly as practicable,

the effect that neither the percentage of the total equity of the Company

obtainable on exercise of this Warrant nor the aggregate price payable for such

percentage shall be affected by any event described in this Section 7.1(a).

 

            (b) MERGER OR REORGANIZATION, ETC. In the event of any change in the

Common