f8k1210084v_advancegrow.htm


     

     

     

    Exhibit
4.5

     

    
      GUARANTY

      


      THIS GUARANTY (“Guaranty”)
is made December 10, 2008 by the undersigned (the “Guarantor”),
in favor of CCM PARTNERS FUND,
LP, a Cayman Islands Exempted Limited Partnership, (the “Investor”)
of the 18% Subordinated Secured Notes (the “Notes”)
pursuant to the Note Purchase Agreement and the Exhibits thereto dated even date
herewith (the “Note Purchase
Agreement”) (collectively, the “Loan
Documents”) from ADVANCED GROWING SYSTEMS,
INC., a Nevada corporation, (the “Company”).

      


      NOW, THEREFORE, as a material
inducement to the Investor to purchase the Notes from Company, and for further
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Guarantor hereby, unconditionally, irrevocably and absolutely,
warrants and represents to and covenants with the Investor as
follows:

      


      1. Guaranty
of Obligation.  The Guarantor
unconditionally, irrevocably and absolutely, guarantees to the Investor that all
indebtedness evidenced by or provided in the Loan Documents (“Guaranteed
Indebtedness”), will be promptly paid when due and in accordance with the
terms and provisions thereof (and as they may be amended, extended or renewed
from time to time) including, without limitation, interest on all of the above
amounts as agreed upon between the Company and the Investor, and any and all
renewals, extensions and rearrangements of all or any part of the Guaranteed
Indebtedness.  This is a continuing guaranty and shall continue to
apply without regard to the form or amount of indebtedness or obligation which
the Company may create, renew, extend or alter in whole or in part, without
notice to the Guarantor.

      


      2. Liability
for Other Indebtedness.  If the Guarantor
is or becomes liable for any indebtedness owing by the Company to the Investor
by endorsement or otherwise than under this Guaranty, such liability shall not
be in any manner impaired or affected hereby, and the rights of the Investor
hereunder shall be cumulative of any and all other rights that the Investor may
ever have against the Guarantor.  The exercise by the Investor of any
right or remedy hereunder or under any other instrument, or at law or in equity,
shall not preclude the concurrent or subsequent exercise of any other right or
remedy.

      


      3. No
Release From Obligations.  The obligations,
covenants, agreements and duties of the Guarantor under this Guaranty shall not
be released or impaired in any manner whatsoever, without the written consent of
the Investor, including on account of any or all of the following:

      


      a. any
permitted assignment, endorsement or transfer, in whole or in part, of the
Guaranteed Indebtedness, although made without consent of the
Guarantor;

       

      b. any
waiver by the Investor of the performance or observance by either or both of the
Company or the Guarantor of any of the agreements, covenants, terms or
conditions contained in any document evidencing, governing or securing the
Guaranteed Indebtedness;

       

       

      
        
          
          

        

        
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      c. any
extension of the time for payment or performance of all or any portion of the
Guaranteed Indebtedness;

       

      d. the
renewal, rearrangement, modification or amendment (whether material or
otherwise) of any duty, agreement or obligation of the Company set forth in any
document evidencing, governing or securing the Guaranteed
Indebtedness;

       

      e. the
voluntary or involuntary liquidation, sale or other disposition of all or
substantially all of the assets of either or both of the Company or the
Guarantor;

       

      f. any
receivership, insolvency, bankruptcy, reorganization or other similar
proceedings or lack of corporate power, affecting either or both of the Company
or the Guarantor or any of their assets;

       

      g. any
release, withdrawal, surrender, exchange, substitution, subordination or loss of
any security or other guaranty at any time existing in connection with all or
any portion of the Guaranteed Indebtedness, or the acceptance of additional or
substitute property as security therefore;

       

      h. the
release or discharge of the Company or the Guarantor from the observance or
performance of any agreement, covenant, term or condition contained in any
document evidencing, governing or securing the Guaranteed
Indebtedness;

       

      i. any
action which the Investor may take or omit to take by virtue of any document
evidencing, governing or securing the Guaranteed Indebtedness or through any
course of dealing with either or both of the Company or the
Guarantor;

       

      j. the
addition of a new guarantor or guarantors;

       

      k. the
operation of law or any other cause, whether similar or dissimilar to the
foregoing;

       

      l. any
adjustment, indulgence, forbearance or compromise that may be granted or given
by Investor to any party;

       

      m. the
failure by Investor to file or enforce a claim against the estate (either in
administration, bankruptcy or other proceeding) of the Company;

       

      n. if the
recovery from the Company becomes barred by any statute of limitations or is
otherwise prevented;

       

      o. any
defenses, set-offs or counterclaims which may be available to the
Company;

       

      p. any
impairment, modification, change, release or limitation of liability of, or stay
of actions of lien enforcement proceedings against the Company, its property, or
its estate in bankruptcy resulting from the operation of any present or future
provision of the Bankruptcy Code or any other similar federal or state statute,
or from the decision of any court; or

       

       

      
        
          
          

        

        
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      q. any
neglect, delay, omission, failure or refusal of Investor to take or prosecute
any action for the collection of any of the Guaranteed Indebtedness or to
foreclose or take or prosecute any action in connection with any lien, right of
security (including perfection thereof), existing or to exist in connection
with, or as security for, any of the Guaranteed Indebtedness, it being the
intention hereof that the Guarantor shall remain liable as principals on the
Guaranteed Indebtedness, notwithstanding any act, omission or thing which might,
but for the provisions hereof, otherwise operate as a legal or equitable
discharge of the Guarantor.

       

      4. Payment
and Performance of Obligations.  In the event of
default by Company in payment or performance of the Guaranteed Indebtedness, or
any part thereof, when such indebtedness or performance becomes due, either by
its terms or as the result of the exercise of any power to accelerate, the
Guarantor shall, without notice or demand, and without any notice having been
given to the Guarantor of the acceptance by the Investor of this Guaranty and
without any notice having been given to the Guarantor of the creating or
incurring of such indebtedness, pay the amount due thereon to the Investor, at
its office, or at such other place as may be designated in writing by the
Investor, and it shall not be necessary for the Investor, in order to enforce
such payment by the Guarantor, first, to institute suit or exhaust its remedies
against the Company or others liable on such indebtedness, or to enforce its
rights against any security which shall ever have been given to secure such
indebtedness.

      


      5. Waiver of
Notice.  Notice to the
Guarantor of the acceptance of this Guaranty and of the making, renewing or
assignment of the Guaranteed Indebtedness and each item thereof, are hereby
expressly waived by the Guarantor.

      


      6. Payments
by Company.  Each payment on
the Guaranteed Indebtedness shall be deemed to have been made by the Company
unless express written notice is given to Investor at the time of such payment
that such payment is made by the Guarantor as specified in such
notice.

      


      7. Releases
and Waivers.  If all or any
part of the Guaranteed Indebtedness at any time be secured, the Guarantor agree
that the Investor may at any time and from time to time, at its discretion and
with or without valuable consideration, allow substitution or withdrawal of
collateral or other security and release collateral or other security without
impairing or diminishing the obligations of the Guarantor
hereunder.  The Guarantor further agrees that if the Company executes
in favor of the Investor any collateral agreement, deed of trust or other
security instrument, the exercise by the Investor of any right or remedy thereby
conferred on the Investor shall be wholly discretionary with the Investor, and
that the exercise or failure to exercise any such right or remedy shall in no
way impair or diminish the obligations of the Guarantor
hereunder.  The Guarantor further agrees that the Investor shall not
be liable for its failure to use diligence in the collection of the Guaranteed
Indebtedness or in preserving the liability of any person liable on the
Guaranteed Indebtedness, and the Guarantor hereby waives presentment for
payment, protest and notice thereof, notice of acceleration, and diligence in
bringing suits against any person liable on the Guaranteed Indebtedness, or any
part thereof.

       

       

      
        
          
          

        

        
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      8. No
Release of the Guarantor.  If the Guaranteed
Indebtedness at any time exceeds the amount permitted by law, or the Company is
not liable because the act of creating the Guaranteed Indebtedness is ultra
vires, or the officers or persons creating the Guaranteed Indebtedness acted in
excess of their authority, and for these reasons the Guaranteed Indebtedness
which the Guarantor agrees to pay cannot be enforced against the Company, such
fact shall in no manner affect the Guarantor’s liability hereunder, but the
Guarantor shall be liable under this Guaranty notwithstanding that the Company
is not liable for the Guaranteed Indebtedness, and to the same extent the
Guarantor would have been liable if the Guaranteed Indebtedness had been
enforceable against the Company.

      


      9. Optional
Acceleration.  In the Event of
Default by the Company, as such term is defined in the Note Purchase Agreement
which are part of the Loan Documents, and if any such Event of Default shall
occur at a time when any of the Guaranteed Indebtedness may not then be due and
payable, such Guaranteed Indebtedness, at the option of the Investor, shall
thereupon be deemed to be immediately due and payable in full, and the Guarantor
shall pay to the Investor forthwith the full amount which would be payable
hereunder if all Guaranteed Indebtedness were then due and payable.

      


      10. Successors
and Assigns.  This Guaranty is
for the benefit of the Investor, its permitted successors and assigns, and in
the event of an assignment by the Investor, its permitted successors or assigns,
of the Guaranteed Indebtedness, or any part thereof, the rights and benefits
hereunder, to the extent applicable to the indebtedness so assigned, may be
transferred with such indebtedness.

      


      11. Modifications
and Waivers. Cumulative Rights.  No modification,
consent, amendment or waiver of any provision of this Guaranty, nor consent to
any departure by the Guarantor therefrom, shall be effective unless the same
shall be in writing and signed by an officer of the Investor and the Guarantor,
and then shall be effective only in the specific instance and for the purpose
for which given.  No notice to or demand on the Guarantor in any case
shall, of itself, entitle the Guarantor to any other or further notice or demand
in similar or other circumstances.  No delay or omission by the
Investor in exercising any power or right hereunder shall impair any such right
or power or be construed as a waiver thereof or any acquiescence therein, nor
shall any single or partial exercise of any such power preclude other or further
exercise thereof, or the exercise of any other right or power
hereunder.  All rights and remedies of the Investor hereunder are
cumulative of each other and of every other right or remedy which the Investor
may otherwise have at law or in equity or under any other contract or document,
and the exercise of one or more rights or remedies shall not prejudice or impair
the concurrent or subsequent exercise of other rights or remedies.  In
this Guaranty, whenever the context so requires, the singular number includes
the plural, and conversely.

       

       

      
        
          
          

        

        
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      12. Compliance
with Laws.  Should the
Guarantor be permitted to raise usury as a defense under applicable law, then no
provision herein or in the Loan Documents shall require the payment or permit
the collection of interest in excess of the maximum permitted by
law.  Should such defense be available, the Guarantor shall not be
obligated to pay the amount of such interest to the extent that it is in excess
of the amount permitted by law as to the Guarantor.  Should the
Guarantor be permitted to raise the usury defense and prevail, the Loan
Documents shall be held subject to reduction of the interest charged to the
amount allowed under said usury laws as now or hereafter construed by the courts
having jurisdiction.  The parties agree that New York law shall
control as to this issue.

      


      13. Benefit
to Guarantor.  The Guarantor
acknowledges and warrants that it has derived or expects to derive financial and
other advantage and benefit, directly or indirectly, from the Guaranteed
Indebtedness and from each and every renewal, extension, release of collateral
or other relinquishment of legal rights made or granted or to be made or granted
by the Investor to the Company.

      


      14. Attorney's
Fees.  The Investor
shall be entitled to recover its reasonable attorneys’ fees and expenses in the
event of any dispute between the parties arising under this Agreement in which
Investor are the prevailing party.

      


      15. Costs of
Collection.  In the event of a
Default or an Event of Default, in addition to any other sums payable by the
Guarantor hereunder, the Guarantor shall pay the Investor’s and any other
holders’ of the Notes costs of collection, including reasonable attorneys’ fees,
including post-judgment costs of collection, incurred by the Investor’s or any
other holders’ of the Notes in the collection of the obligations of the
Guarantor to the Investor and any other holders of the Notes whether under this
Agreement or the other Loan Documents to which Guarantor is a party, and in the
enforcement of any provision hereof and thereof, whether suit be brought or
not.

      


      16. The
Guarantor's Warranties.  The Guarantor
hereby warrants and represents to the Investor that:

      


      a. The
Guarantor is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and is duly qualified and is in good
standing in each jurisdiction in which such qualification is required by law,
other than those jurisdictions as to which the failure to be so qualified or in
good standing could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect.  The Guarantor has the
corporate or other requisite power and authority to execute and deliver this
Guaranty and to perform the provisions hereof.

       

      b. This
Guaranty has been duly authorized by all necessary action on the part of the
Guarantor, and this Guaranty constitutes a legal, valid and binding obligation
of the Guarantor enforceable against the Guarantor in accordance with its
terms.

       

       

      
        
          
          

        

        
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      c. The
execution, delivery and performance by the Guarantor of this Guaranty will not
(i) contravene, result in any breach of, or constitute a default under, or
result in the creation of any lien, claim or encumbrance in respect of any
property of the Guarantor under, any indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease, corporate charter or by-laws or other
organizational document, or any other agreement or instrument to which the
Guarantor is bound or by which the Guarantor or any of its properties may be
bound or affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or governmental authority applicable to the Guarantor or (iii)
violate any provision of any statute or other rule or regulation of any
governmental authority applicable to the Guarantor.

       

      d. No
consent, approval or authorization of, or registration, filing or declaration
with, any governmental authority is required in connection with the execution,
delivery or performance by the Guarantor of this Guarantee.

       

      e. Upon the
execution and delivery hereof, the Guarantor will be solvent, will be able to
pay its debts as they mature and will have capital sufficient to carry on its
business.

       

      17. Subordination
and No Subrogation.  If, for any
reason whatsoever, the Company now or hereafter becomes indebted to the
Guarantor, such indebtedness and all interest thereon, shall, at all times, be
subordinate in all respects to the Loan Documents, and the Guarantor shall not
be entitled to enforce or receive payment thereof until the Guaranteed
Indebtedness has been fully paid and satisfied.  Notwithstanding
anything to the contrary contained in this Guaranty or any payments made by the
Guarantor hereunder, the Guarantor shall not have any right of subrogation in or
under the Loan Documents or to participate in any way therein, or any right,
title or interest in and to any mortgaged property or any collateral for the
Guaranteed Indebtedness, all such rights of subrogation and participation being
hereby expressly waived and released, until the Guaranteed Indebtedness has been
fully paid and satisfied.

      


      18. Governing
Law.  The validity and interpretation of this Guaranty shall be
governed by, and construed and enforced in accordance with, the laws of the
State of New York.  The Guarantor and its assigns hereby consents to
the exclusive jurisdiction and venue of the Courts of the State of New York,
located in the City and County of New York and the United States District Court,
Southern District, for the State of New York with respect to any matter relating
to this Guaranty and performance of the Guarantor’s obligations hereunder, the
documents and instruments executed and delivered concurrently herewith or
pursuant hereto and performance of the Guarantor’s obligations thereunder and
the Guarantor hereby consents to the personal jurisdiction of such courts and
shall subject itself to such personal jurisdiction.  Any action, suit
or proceeding relating to such matters shall be commenced, pursued, defended and
resolved only in such courts and any appropriate appellate court having
jurisdiction to hear an appeal from any judgment entered in such
courts.  The Guarantor irrevocably waives the defense of an
inconvenient forum to the maintenance of such suit or
proceeding.  Service of process in any action, suit or proceeding
relating to such matters may be made and served within or outside the State of
New York by registered or certified mail to the Guarantor and its
representatives at their respective addresses specified in on this signature
page hereto, provided that a reasonable time, not less than thirty (30) days, is
allowed for response.  Service of process may also be made in such
other manner as may be permissible under the applicable court
rules.

       

       

      
        
          
          

        

        
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      19. Waiver of Jury
Trial.  The Guarantor hereby agrees to waive its rights to a
jury trial of any claim or cause of action based upon or arising out of this
Guaranty.  The scope of this waiver is intended to be all encompassing
of any disputes that may be filed in any court and that relate to the subject
mater of this Guaranty, including without limitation contract claims, tort
claims, breach of duty claims and all other common law and statutory
claims.  The Guarantor acknowledges that this waiver is a material
inducement for the Investor to enter into the Note Purchase Agreement, that the
Investor has relied on this waiver in entering into the Note Purchase Agreement,
and that the Investor will continue to rely on this waiver in its related future
dealings with the Company and the Guarantor.  The Guarantor further
warrants and represents that it has reviewed this waiver with its legal counsel,
and that such party has knowingly and voluntarily waives its rights to a jury
trial following such consultation.  This waiver is irrevocable,
meaning that, notwithstanding anything herein to the contrary, it may not be
modified either orally or in writing, and this waiver shall apply to any
subsequent amendments, renewals and supplements or modifications to this
agreement.  In the event of litigation, this Agreement may be filed as
a written consent to a trial by the court.

      


      20. Severability.  If any provision
of this Guaranty or the application thereof to any person or circumstance shall,
for any reason and to any extent, be invalid or unenforceable, neither the
remainder of this Guaranty nor the application of such provision to any other
persons or circumstances shall be affected thereby, but rather the same shall be
enforced to the greatest extent permitted by law.

      


      21. Paragraph
Headings.  The paragraph
headings inserted in this Guaranty have been included for convenience only and
are not intended, and shall not be construed, to limit or define in any way the
substance of any paragraph contained herein.

      


      22. Compounding
and Settlement.  The Guarantor
agrees that the Investor, in its discretion, may (i) bring suit against the
Guarantor and other guarantors, if any, jointly and severally or against any one
or more of them, (ii) compound or settle with any one or more of guarantor(s)
for such consideration as the Investor may deem proper, and (iii) release one or
more of guarantor(s) from liability hereunder, and that no such action shall
impair the rights of the Investor to collect the Guaranteed Indebtedness (or the
unpaid balance thereof) from the Guarantor, not so sued, settled with or
released.

      


      23. Termination.  This
Guaranty shall terminate upon the Company’s repayment in full of the Guaranteed
Indebtedness; provided,
however, that this Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time payment of all, or any part
thereof, of the principal of or interest on any of the Obligations is rescinded
or must otherwise be restored by the Investor, whether under any bankruptcy or
insolvency proceeding or otherwise.

       

       

      
        
          
          

        

        
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      24. No
Fraudulent Conveyance.  The Guarantor and the Company hereby
confirm that it is their intention that the obligations of the Guarantor
hereunder shall not constitute a fraudulent transfer or obligation for the
purposes of the U.S. Bankruptcy Code and applicable state law, including any
state law based on the Uniform Fraudulent Transfer Act or the Uniform Fraudulent
Conveyance Act.  To effectuate the foregoing intention, Company and
the Guarantor (each a “Co-Obligor”
and collectively the “Co-Obligors”)
agree to reimburse, in an amount equal to (a) the amount of the proceeds that
such Co-Obligor received, directly or indirectly, from the Investor under the
Note Purchase Agreement, including the Notes, less (b) the principal amount such
Co-Obligor repaid to the Investor under the Note Purchase Agreement, including
the Notes, but not below zero, to each other Co-Obligor so that the receiving
Co-Obligor receives in the aggregate from each paying Co-Obligor an amount equal
to (a) the principal amount such receiving Co-Obligor repaid to the Investor
under the Note Purchase Agreement, including the Notes, less (b) the amount of
the proceeds that such Co-Obligor received, directly or indirectly, from the
Investor under the Note Purchase Agreement, including the Notes, but not below
zero.  The Investor is an intended third party beneficiary under this
Section 24.  Nothing in the Section 24 shall limit the Guarantor’s
liability under this Guaranty or any of the Company’s obligations under the Note
Purchase Agreement or the other agreement referenced therein.

      


      25. Counterparts.  This
Guaranty may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument.

      


      26. Facsimile
Signature.  In the event that any 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 party
executing (or on whose behalf such signature is executed) with the same force
and effect as if such signature page were an original thereof.

      


      


      [Remainder of Page Left Blank
Intentionally]

       

       

      
        
          
          

        

        
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      IN WITNESS WHEREOF, this
Guaranty has been duly executed by the undersigned on the date set forth
above.

      


      GUARANTOR:

       

      ORGANIC
GROWING SYSTEMS, INC.

       

      
        By: /s/  Christopher
J.
Nichols                     
        

        Name:  Christopher
J. Nichols    

        Title:    


      

      


      
        	
                Notices:

              	
                Organic
      Growing Systems, Inc.

                3050
      Royal Boulevard South, Suite 135

                Alpharetta,
      GA 30022

                Attn:
      Christopher J. Nichols

                Telephone:
      (800) 747-0720

                Facsimile:
      (678) 387-5065

              
	 	 
	 	

                with
      copies to (which shall not constitute notice):

                Anslow
      & Jaclin LLP

                195
      Route 9 South

                Manalapan,
      NJ 07726

                Attn:
      Joseph M. Lucosky, Esq.

                Telephone:
      (732) 409-1212

                Facsimile:
      (732) 577-1188

              
	 	 


      

       

      


      


      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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      ADDITIONAL
SIGNATURE PAGE TO GUARANTY

      


       

      COMPANY:

       

      ADVANCED
GROWING SYSTEMS, INC.

       

      
        By: /s/  Christopher
J.
Nichols                     
        

        Name:  Christopher
J. Nichols    

        Title:    


      

      


      


      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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