f8k1210084ii_advancegrow.htm


     

    Exhibit
4.2

     

    
      Neither
the offer nor sale of the securities represented by this certificate has been
registered under the Securities Act of 1933, as amended, (the
“Act”).  The securities may not be sold, transferred or assigned in
the absence of an effective registration statement for the securities under the
Act, or an opinion of counsel, in form, substance and scope customary for
opinions of counsel in comparable transactions, that registration is not
required under the Act or unless sold pursuant to Rule 144 or Regulation S under
the Act.

      


      18%
SUBORDINATED SECURED PROMISSORY NOTE

       

      
        	
                No.
      1

                US$250,000.00 

              	
                December 10,
      2008

                New York, New
      York

              


      

       

       

      FOR VALUE
RECEIVED, the undersigned, ADVANCED
GROWING SYSTEMS, INC., a Nevada corporation, (the “Company”),
promises to pay to the order of CCM
PARTNERS FUND, LP, a Cayman Islands Exempted Limited Partnership, (the
“Holder”)
or registered assigns, the principal sum of Two
Hundred Fifty Thousand Dollars (US$250,000.00) plus accrued and unpaid
interest, on the earlier (the “Maturity
Date”) of (i) June 10, 2009 (the “Final
Maturity Date”), or (ii) the date that this Note may otherwise be due, by
acceleration or otherwise, pursuant to this Note or the Note Purchase Agreement
dated December 10, 2008 by and between the Company and the Holder (as from time
to time amended, the “Note
Purchase Agreement”).  Capitalized terms not otherwise defined
herein shall be as defined in the Note Purchase Agreement.

      


      1. Interest.  The
outstanding principal amount of this Note shall bear simple interest at a rate
of eighteen percent (18%) per annum from the date of this Note above until the
Maturity Date.  Such interest will be based on a 360-day year and
calculated for the actual number of days elapsed in which interest is being
calculated.

      


      2. Interest
Payments.  The Company shall pay the Holder all accrued but
unpaid interest on the first Business Day of each calendar month commencing the
month of January 2009 and the Maturity Date.  The Holder shall have no
obligation to deliver to the Company any invoice or other statement setting
forth the amount of principal, interest or any other amounts due on any payment
date, and any absence by the Holder to provide any such invoice or statement
shall not reduce or otherwise impair the Company’s obligation to pay any amounts
payable hereunder.  The Company shall make all interest payments under
this Note to the Holder by 2:00 p.m. on the date when due unless the date is not
a Business Day.  If the due date is not a Business Day, payment is due
on, and interest will accrue to, the next Business Day.  The Company
shall make all payments in United States Dollars in immediately available funds
transferred by wire transfer to an account designated by the
Holder.

      


      3. Default
Interest.  If a Default or an Event of Default, as such terms
are defined in the Note Purchase Agreement, has occurred and is continuing,
interest shall accrue, in addition to interest under Section 1 above, at the
Default Rate, as defined in the Note Purchase Agreement.

       

       

      
        
          
          

        

        
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      4. Seniority.  Except
as set forth in the next sentence, this Note shall be senior to all obligations
of the Company.  This Note shall be subordinate in payment to that
promissory note dated August 20, 2008 between the Company and the Lamassu
Capital Management, LLC (the “Senior
Note”).

      


      5. Security.  Payment
of the principal of, and interest on, this Note, and all other amounts due under
the Note Purchase Agreement, is secured by certain real and personal property
and certain personal guaranties as provided in the Note Purchase
Agreement.

      


      6. Optional
Prepayment.  The Company may
prepay this Note, in whole, but not in part, at any one time, by paying the
Holder an amount equal to the difference between (i) the sum of (A) the original
principal amount of this Note; (B) interest otherwise due under this Note as if
this Note was paid on the Final Maturity Date; (C) any accrued but unpaid
Default Interest, and (D) any costs of collection or other amount otherwise due
the Holder pursuant to the Note Purchase Agreement or other Transaction
Documents, as referenced therein; less (ii) any principal and accrued interest
previously paid to the Holder on this Note

      


      7. Mandatory
Prepayment.  Subject as provided in
Section 4 above, if, at any time and from time to time, the Company or
any Subsidiary raises any capital from the issuance of any equity, equity
derivative or debt securities, (excluding capital raised upon exercise of
warrants and options outstanding prior to the Closing Date), then the Company
shall prepay this Note in the amount equal to the lesser of:

      


      a. the
difference between (i) the sum of (A) the original principal amount of this
Note; (B) interest otherwise due under this Note as if this Note was paid on the
Final Maturity Date; (C) any accrued but unpaid Default Interest, and (D) any
costs of collection or other amount otherwise due the Holder pursuant to the
Note Purchase Agreement or other Transaction Documents, as referenced therein,
and (ii) any principal and accrued interest previously paid to the Holder on
this Note, and

      


      b. the gross
proceeds from such capital raised from time to time less any amount required to
be paid under, and actually paid to the holder of, the Senior Note from the
gross proceeds from such capital raise.

      


      8. Payment.  Payment of this
Note and all interest thereon shall be paid to the Holder by wire transfer to an
account designated by the Holder or at such address outside of the United States
and its possessions as the Holder may instruct the Borrower in
writing.

       

       

      
        
          
          

        

        
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      9. Portfolio
Interest.  It is intended that all interest paid hereunder,
whether the original issue discount or Default Interest, shall constitute
“portfolio interest” within the meaning of Section 871(h) of the Internal
Revenue Code of 1986, as amended, and the Treasury Regulations promulgated
thereunder.  Under no circumstances will the right to receive any of
the interest under this Note be sold or resold to any person, except to a person
who is not a United States person.  The
Holder represents that it is not a United States person.  Any United
States person who does hold any obligation of the Borrower under this Note is
subject to limitations under the United States income tax laws.

      


      10. Facsimile
Signature.  In the event that the Company’s signature is
delivered by facsimile transmission, PDF, electronic signature or other similar
electronic means, such signature shall create a valid and binding obligation of
the Company with the same force and effect as if such signature page were an
original thereof.

      


       

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      IN WITNESS WHEREOF, the
Company has executed this Note as of the day and year first above
written.

       

      ADVANCED
GROWING SYSTEMS, INC.

      


      


      By: /s/
Christopher J.
Nichols                         

      Name:
Christopher J. Nichols

      Title:
President/CEO

      


      ACKNOWLEDGEMENT

      


      STATE OF
________________________               )

       

      )  ss.:

       

      COUNTY OF
______________________                )

       

      On the
___ day of __________________, 200__, before me, the undersigned, a notary
public in and for such state, personally appeared ________________________,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity as an executive
officer on behalf of _________________________, and that by his signature on the
instrument, he executed the instrument, and that he made such appearance before
the undersigned.

       

       

      __________________________________

       

      Notary Public

      
 

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