EXHIBIT 4.2
THIS WARRANT AND THE SHARES OF
COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE
ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES
UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE
STATE SECURITIES LAWS IS NOT REQUIRED.
SERIES E WARRANT TO
PURCHASE
SHARES OF COMMON STOCK
OF
ADVANCED GROWING SYSTEMS,
INC.
Expires August 20,
2011
|
No.:
W-E-1083
|
Number of Shares: 888,890
|
Date of Issuance: August 20,
2008
FOR VALUE RECEIVED, the undersigned,
Advanced Growing Systems, Inc., a Nevada corporation (together with
its successors and assigns, the “ Issuer ”),
hereby certifies that Lamassu Capital Management, LLC or its
registered assigns is entitled to subscribe for and purchase,
during the Term (as hereinafter defined), up to Eight Hundred
Eighty Eight Thousand Eight Hundred Ninety (888,890) shares
(subject to adjustment as hereinafter provided) of the duly
authorized, validly issued, fully paid and non-assessable Common
Stock of the Issuer, at an exercise price per share equal to the
Warrant Price then in effect, subject, however, to the provisions
and upon the terms and conditions hereinafter set forth.
Capitalized terms used in this Warrant and not otherwise defined
herein shall have the respective meanings specified in
Section 8 hereof.
1. Term . The term of this
Warrant shall commence on August 20, 2008 and shall expire at
6:00 p.m., Eastern Time, on August 20, 2011 (such period being
the “ Term ”).
2. Method of Exercise; Payment;
Issuance of New Warrant; Transfer and Exchange .
(a) Time of Exercise . The
purchase rights represented by this Warrant may be exercised in
whole or in part during the Term.
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(b) Method of Exercise . The
Holder hereof may exercise this Warrant, in whole or in part, by
the surrender of this Warrant (with the exercise form attached
hereto duly executed) at the principal office of the Issuer, and by
the payment to the Issuer of an amount of consideration therefor
equal to the Warrant Price in effect on the date of such exercise
multiplied by the number of shares of Warrant Stock with respect to
which this Warrant is then being exercised, payable by certified or
official bank check or by wire transfer to an account designated by
the Issuer.
(c) Issuance of Stock
Certificates . In the event of any exercise of this Warrant in
accordance with and subject to the terms and conditions hereof,
certificates for the shares of Warrant Stock so purchased shall be
dated the date of such exercise and delivered to the Holder hereof
within a reasonable time, not exceeding five (5) Trading Days
after such exercise (the “ Delivery Date ”). The
Holder shall deliver this original Warrant, or an indemnification
undertaking with respect to such Warrant in the case of its loss,
theft or destruction, at such time that this Warrant is fully
exercised. With respect to partial exercises of this Warrant, the
Issuer shall keep written records of the number of shares of
Warrant Stock exercised as of each date of exercise.
(d) Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Exercise . In
addition to any other rights available to the Holder, if the Issuer
fails to cause its transfer agent to transmit to the Holder a
certificate or certificates representing the Warrant Stock pursuant
to an exercise on or before the Delivery Date, and if after such
date the Holder is required by its broker to purchase (in an open
market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of the Warrant Stock which
the Holder anticipated receiving upon such exercise (a “
Buy-In” ), then the Issuer shall (1) pay in cash
to the Holder the amount by which (x) the Holder’s total
purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount
obtained by multiplying (A) the number of shares of Warrant
Stock that the Issuer was required to deliver to the Holder in
connection with the exercise at issue times (B) the price at
which the sell order giving rise to such purchase obligation was
executed, and (2) at the option of the Holder, either
reinstate the portion of the Warrant and equivalent number of
shares of Warrant Stock for which such exercise was not honored or
deliver to the Holder the number of shares of Common Stock that
would have been issued had the Issuer timely complied with its
exercise and delivery obligations hereunder. For example, if the
Holder purchases Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted exercise of
shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (1) of the
immediately preceding sentence the Issuer shall be required to pay
the Holder $1,000. The Holder shall provide the Issuer written
notice indicating the amounts payable to the Holder in respect of
the Buy-In, together with applicable confirmations and other
evidence reasonably requested by the Issuer. Nothing herein shall
limit a Holder’s right to pursue any other remedies available
to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with
respect to the Issuer’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of
this Warrant as required pursuant to the terms hereof.
(e) Transferability of
Warrant . Subject to Section 2(h) hereof, this Warrant may
be transferred by a Holder, in whole or in part, without the
consent of the Issuer. If transferred pursuant to this paragraph,
this Warrant may be transferred on the books of the Issuer by the
Holder hereof in person or by duly authorized attorney, upon
surrender of this Warrant at the principal office of the
Issuer,
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properly endorsed (by the Holder executing an
assignment in the form attached hereto) and upon payment of any
necessary transfer tax or other governmental charge imposed upon
such transfer. This Warrant is exchangeable at the principal office
of the Issuer for Warrants to purchase the same aggregate number of
shares of Warrant Stock, each new Warrant to represent the right to
purchase such number of shares of Warrant Stock as the Holder
hereof shall designate at the time of such exchange. All Warrants
issued on transfers or exchanges shall be dated the Original Issue
Date and shall be identical with this Warrant except as to the
number of shares of Warrant Stock issuable pursuant
thereto.
(f) Continuing Rights of
Holder . The Issuer will, at the time of or at any time after
each exercise of this Warrant, upon the request of the Holder
hereof, acknowledge in writing the extent, if any, of its
continuing obligation to afford to such Holder all rights to which
such Holder shall continue to be entitled after such exercise in
accordance with the terms of this Warrant, provided that if
any such Holder shall fail to make any such request, the failure
shall not affect the continuing obligation of the Issuer to afford
such rights to such Holder.
(g) Compliance with Securities
Laws .
(i) The Holder of this Warrant, by
acceptance hereof, acknowledges that this Warrant and the shares of
Warrant Stock to be issued upon exercise hereof are being acquired
solely for the Holder’s own account and not as a nominee for
any other party, and for investment, and that the Holder will not
offer, sell or otherwise dispose of this Warrant or any shares of
Warrant Stock to be issued upon exercise hereof except pursuant to
an effective registration statement, or an exemption from
registration, under the Securities Act and any applicable state
securities laws.
(ii) Except as provided in paragraph
(iii) below, this Warrant and all certificates representing
shares of Warrant Stock issued upon exercise hereof shall be
stamped or imprinted with a legend in substantially the following
form:
THIS WARRANT AND THE SHARES OF
COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE
ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES
UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE
STATE SECURITIES LAWS IS NOT REQUIRED.
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(iii) The Issuer agrees to reissue
this Warrant or certificates representing any of the Warrant Stock,
without the legend set forth above if at such time, prior to making
any transfer of any such securities, the Holder shall give written
notice to the Issuer describing the manner and terms of such
transfer. Such proposed transfer will not be effected until:
(a) either (i) the Issuer has received an opinion of
counsel reasonably satisfactory to the Issuer, to the effect that
the registration of such securities under the Securities Act is not
required in connection with such proposed transfer, (ii) a
registration statement under the Securities Act covering such
proposed disposition has been filed by the Issuer with the
Securities and Exchange Commission and has become effective under
the Securities Act and the Holder has represented that the Warrant
Stock has been or will be sold, (iii) the Issuer has received
other evidence reasonably satisfactory to the Issuer that such
registration and qualification under the Securities Act and state
securities laws are not required, or (iv) the Holder provides
the Issuer with reasonable assurances that such security can be
sold pursuant to Rule 144 under the Securities Act; and
(b) either (i) the Issuer has received an opinion of
counsel reasonably satisfactory to the Issuer, to the effect that
registration or qualification under the securities or “blue
sky” laws of any state is not required in connection with
such proposed disposition, or (ii) compliance with applicable
state securities or “blue sky” laws has been effected
or a valid exemption exists with respect thereto. The Issuer will
respond to any such notice from a holder within five
(5) Trading Days. In the case of any proposed transfer under
this Section 2(h), the Issuer will use reasonable efforts to
comply with any such applicable state securities or “blue
sky” laws, but shall in no event be required, (x) to
qualify to do business in any state where it is not then qualified,
(y) to take any action that would subject it to tax or to the
general service of process in any state where it is not then
subject, or (z) to comply with state securities or “blue
sky” laws of any state for which registration by coordination
is unavailable to the Issuer. The restrictions on transfer
contained in this Section 2(h) shall be in addition to, and
not by way of limitation of, any other restrictions on transfer
contained in any other section of this Warrant. Whenever a
certificate representing the Warrant Stock is required to be issued
to a the Holder without a legend, in lieu of delivering physical
certificates representing the Warrant Stock, the Issuer shall use
its reasonable best efforts to cause its transfer agent to
electronically transmit the Warrant Stock to the Holder by
crediting the account of the Holder’s Prime Broker with DTC
through its DWAC system. Notwithstanding the foregoing to the
contrary, the Issuer or its transfer agent shall only be obligated
to issue and deliver the shares to the DTC on a holder’s
behalf via DWAC if such exercise is in connection with a sale and
the Issuer and its transfer agent are participating in DTC through
the DWAC system.
(i) Accredited Investor
Status . In no event may the Holder exercise this Warrant in
whole or in part unless the Holder is an “accredited
investor” as defined in Regulation D under the Securities
Act.
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3. Stock Fully Paid; Reservation
and Listing of Shares; Covenants .
(a) Stock Fully Paid . The
Issuer represents, warrants, covenants and agrees that all shares
of Warrant Stock which may be issued upon the exercise of this
Warrant or otherwise hereunder will, when issued in accordance with
the terms of this Warrant, be duly authorized, validly issued,
fully paid and nonassessable and free from all taxes, liens and
charges created by or through the Issuer. The Issuer further
covenants and agrees that during the period within which this
Warrant may be exercised, the Issuer will at all times have
authorized and reserved for the purpose of issuance upon exercise
of this Warrant a number of shares of Common Stock equal to at
least one hundred twenty percent (120%) of the aggregate
number of shares of Common Stock to provide for the exercise of
this Warrant.
(b) Reservation . If any
shares of Common Stock required to be reserved for issuance upon
exercise of this Warrant or as otherwise provided hereunder require
registration or qualification with any governmental authority under
any federal or state law before such shares may be so issued, the
Issuer will in good faith use its best efforts as expeditiously as
possible at its expense to cause such shares to be duly registered
or qualified. If the Issuer shall list any shares of Common Stock
on any securities exchange or market it will, at its expense, list
thereon, maintain and increase when necessary such listing, of, all
shares of Warrant Stock from time to time issued upon exercise of
this Warrant or as otherwise provided hereunder (provided that such
Warrant Stock has been registered pursuant to a registration
statement under the Securities Act then in effect), and, to the
extent permissible under the applicable securities exchange rules,
all unissued shares of Warrant Stock which are at any time issuable
hereunder, so long as any shares of Common Stock shall be so
listed. The Issuer will also so list on each securities exchange or
market, and will maintain such listing of, any other securities
which the Holder of this Warrant shall be entitled to receive upon
the exercise of this Warrant if at the time any securities of the
same class shall be listed on such securities exchange or market by
the Issuer.
(c) Covenants . The Issuer
shall not by any action including, without limitation, amending the
Articles of Incorporation or the by-laws of the Issuer, or through
any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other action, avoid
or seek to avoid the observance or performance of any of the terms
of this Warrant, but 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
the Holder hereof against dilution (to the extent specifically
provided herein) or impairment. Without limiting the generality of
the foregoing, the Issuer will (i) not permit the par value,
if any, of its Common Stock to exceed the then effective Warrant
Price, (ii) not amend or modify any provision of the Articles
of Incorporation or by-laws of the Issuer in any manner that would
adversely affect the rights of the Holders of the Warrants,
(iii) take all such action as may be reasonably necessary in
order that the Issuer may validly and legally issue fully paid and
nonassessable shares of Common Stock, free and clear of any liens,
claims, encumbrances and restrictions (other than as provided
herein) upon the exercise of this Warrant, and (iv) use its
best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction
thereof as may be reasonably necessary to enable the Issuer to
perform its obligations under this Warrant.
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(d) Loss, Theft, Destruction of
Warrants . Upon receipt of evidence satisfactory to the Issuer
of the ownership of and the loss, theft, destruction or mutilation
of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security satisfactory to
the Issuer or, in the case of any such mutilation, upon surrender
and cancellation of such Warrant, the Issuer will make and deliver,
in lieu of such lost, stolen, destroyed or mutilated Warrant, a new
Warrant of like tenor and representing the right to purchase the
same number of shares of Common Stock.
4. Adjustment of Warrant Price
and Number of Shares Issuable Upon Exercise . The Warrant Price
and the Warrant Share Number shall be subject to adjustment from
time to time as set forth in this Section 4. The Issuer shall
give the Holder notice of any event described below which requires
an adjustment pursuant to this Section 4 in accordance with
the notice provisions set forth in Section 5.
(a) Recapitalization,
Reorganization, Reclassification, Consolidation, Merger or Sale
.
(i) In case the Issuer after the
Original Issue Date shall do any of the following (each, a “
Triggering Event ”): (a) consolidate or merge
with or into any other Person and the Issuer shall not be the
continuing or surviving corporation of such consolidation or
merger, or (b) permit any other Person to consolidate with or
merge into the Issuer and the Issuer shall be the continuing or
surviving Person but, in connection with such consolidation or
merger, any Capital Stock of the Issuer shall be changed into or
exchanged for Securities of any other Person or cash or any other
property, or (c) transfer all or substantially all of its
properties or assets to any other Person, or (d) effect a
capital reorganization or reclassification of its Capital Stock,
then, and in the case of each such Triggering Event, proper
provision shall be made to the Warrant Price and the number of
shares of Warrant Stock that may be purchased upon exercise of this
Warrant so that, upon the basis and the terms and in the manner
provided in this Warrant, the Holder of this Warrant shall be
entitled upon the exercise hereof at any time after the
consummation of such Triggering Event, to the extent this Warrant
is not exercised prior to such Triggering Event, to receive at the
Warrant Price as adjusted to take into account the consummation of
such Triggering Event, in lieu of the Common Stock issuable upon
such exercise of this Warrant prior to such Triggering Event, the
Securities, cash and property to which such Holder would have been
entitled upon the consummation of such Triggering Event if such
Holder had exercised the rights represented by this Warrant
immediately prior thereto (including the right of a shareholder to
elect the type of consideration it will receive upon a Triggering
Event), subject to adjustments (subsequent to such corporate
action) as nearly equivalent as possible to the adjustments
provided for elsewhere in this Section 4, and the Warrant
Price shall be adjusted to equal the product of (A) the
closing price of the common stock of the continuing or surviving
corporation as a result of such Triggering Event as of the date
immediately preceding the date of the consummation of such
Triggering Event multiplied by (B) the quotient of
(i) the Warrant Price divided by (ii) the Per Share
Market Value of the Common Stock as of the date immediately
preceding the Original Issue Date; provided , however
, the Holder at its option may elect to receive an amount in cash
equal to the value of this Warrant calculated in accordance with
the Black-Scholes formula. Immediately upon the occurrence of a
Triggering Event, the Issuer shall notify the Holder in writing of
such Triggering Event and provide the calculations in determining
the number of shares of Warrant Stock issuable upon
exercise
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of the new warrant and the adjusted
Warrant Price. Upon the Holder’s request, the continuing or
surviving corporation as a result of such Triggering Event shall
issue to the Holder a new warrant of like tenor evidencing the
right to purchase the adjusted number of shares of Warrant Stock
and the adjusted Warrant Price pursuant to the terms and provisions
of this Section 4(a)(i). Notwithstanding the foregoing to the
contrary, this Section 4(a)(i) shall only apply if the
surviving entity pursuant to any such Triggering Event is a company
that has a class of equity securities registered pursuant to the
Securities Exchange Act of 1934, as amended, and its common stock
is listed or quoted on a national securities exchange, national
automated quotation system or the OTC Bulletin Board. In the event
that the surviving entity pursuant to any such Triggering Event is
not a public company that is registered pursuant to the Securities
Exchange Act of 1934, as amended, or its common stock is not listed
or quoted on a national securities exchange, national automated
quotation system or the OTC Bulletin Board, then the Holder shall
have the right to demand that the Issuer pay to the Holder an
amount in cash equal to the value of this Warrant calculated in
accordance with the Black-Scholes formula.
(ii) In the event that the Holder
has elected not to exercise this Warrant prior to the consummation
of a Triggering Event and has also elected not to receive an amount
in cash equal to the value of this Warrant calculated in accordance
with the Black-Scholes formula pursuant to the provisions of
Section 4(a)(i) above, so long as the surviving entity
pursuant to any Triggering Event is a company that has a class of
equity securities registered pursuant to the Securities Exchange
Act of 1934, as amended, and its common stock is listed or quoted
on a national securities exchange, national automated quotation
system or the OTC Bulletin Board, the surviving entity and/or each
Person (other than the Issuer) which may be required to deliver any
Securities, cash or property upon the exercise of this Warrant as
provided herein shall assume, by written instrument delivered to,
and reasonably satisfactory to, the Holder of this Warrant,
(A) the obligations of the Issuer under this Warrant (and if
the Issuer shall survive the consummation of such Triggering Event,
such assumption shall be in addition to, and shall not release the
Issuer from, any continuing obligations of the Issuer under this
Warrant) and (B) the obligation to deliver to such Holder such
Securities, cash or property as, in accordance with the foregoing
provisions of this subsection (a), such Holder shall be entitled to
receive, and the surviving entity and/or each such Person shall
have similarly delivered to such Holder an opinion of counsel for
the surviving entity and/or each such Person, which counsel shall
be reasonably satisfactory to such Holder, or in the alternative, a
written acknowledgement executed by the President or Chief
Financial Officer of the Issuer, stating that this Warrant shall
thereafter continue in full force and effect and the terms hereof
(including, without limitation, all of the provisions of this
subsection (a)) shall be applicable to the Securities, cash or
property which the surviving entity and/or each such Person may be
required to deliver upon any exercise of this Warrant or the
exercise of any rights pursuant hereto.
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(b) Stock Dividends, Subdivisions
and Combinations . If at any time the Issuer shall:
(i) make or issue or set a record
date for the holders of the Common Stock for the purpose of
entitling them to receive a dividend payable in, or other
distribution of, shares of Common Stock,
(ii) subdivide its outstanding
shares of Common Stock into a larger number of shares of Common
Stock, or
(iii) combine its outstanding shares
of Common Stock into a smaller number of shares of Common
Stock,
then (1) the number of shares
of Common Stock for which this Warrant is exercisable immediately
after the occurrence of any such event shall be adjusted to equal
the number of shares of Common Stock which a record holder of the
same number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the occurrence of such event would
own or be entitled to receive after the happening of such event,
and (2) the Warrant Price then in effect shall be adjusted to
equal (A) the Warrant Price then in effect multiplied by the
number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the adjustment divided by
(B) the number of shares of Common Stock for which this
Warrant is exercisable immediately after such
adjustment.
(c) Certain Other
Distributions . If at any time the Issuer shall make or issue
or set a record date for the holders of the Common Stock for the
purpose of entitling them to receive any dividend or other
distribution of:
(i) cash (other than a cash dividend
payable out of earnings or earned surplus legally available for the
payment of dividends under the laws of the jurisdiction of
incorporation of the Issuer),
(ii) any evidences of its
indebtedness, any shares of stock of any class or any other
securities or property of any nature whatsoever (other than cash,
Common Stock Equivalents or Additional Shares of Common Stock),
or
(iii) any warrants or other rights
to subs