Exhibit 4.2


 


THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED
UPON ITS

EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON

            TRANSFER
SET FORTH IN SECTION 5 OF THIS
WARRANT       


 


	
  Date of Issuance: July
  24, 2007

  	
  Number of
  Shares: 1,000,000 

  (subject to adjustment)

  



 


MAUNA KEA ENTERPRISES, INC.


Common Stock Purchase Warrant


(Void after July 31, 2012)


                Mauna Kea Enterprises, Inc., a Colorado corporation
(the “Company”), for value received, hereby certifies that Waveland Colorado
Ventures, LLC or its registered assigns (the “Registered Holder”), is entitled,
subject to the terms and conditions set forth below, to purchase from the
Company, at any time or from time to time on or after the date of issuance and
on or before 5:00 p.m. (Mountain time) on July 31, 2012, 1,000,000 shares of
Common Stock, no par value per share, of the Company (“Common Stock”), at a
purchase price of $0.2813 per share.  The
shares of Common Stock purchasable upon exercise of this Warrant, and the
purchase price per share, each as adjusted from time to time pursuant to the
provisions of this Warrant, are hereinafter referred to as the “Warrant Shares”
and the “Purchase Price,” respectively.


1.             Exercise.


(a)           Exercise
for Cash.  The Registered Holder may,
at its option, elect to exercise this Warrant, in whole or in part and at any
time or from time to time, by surrendering this Warrant, with the purchase form
appended hereto as Exhibit I duly executed by or on behalf of the
Registered Holder, at the principal office of the Company, or at such other
office or agency as the Company may designate, accompanied by payment in full,
in lawful money of the United States, of the Purchase Price payable in respect
of the number of Warrant Shares purchased upon such exercise.


(b)           Cashless Exercise.


(i)            The
Registered Holder may, at its option, elect to exercise this Warrant, in whole
or in part and at any time or from time to time, on a cashless basis, by
surrendering this Warrant, with the purchase form appended hereto as Exhibit
I duly executed by or on behalf of the Registered Holder, at the principal
office of the Company, or at such other office or agency as the Company may
designate, by canceling a portion of this Warrant in payment of the Purchase
Price payable in respect of the number of Warrant Shares purchased upon such
exercise.  In the event of an exercise
pursuant to this subsection 1(b), the number of Warrant Shares issued to the
Registered Holder shall be determined according to the following formula:





















 


	
  X = Y(A-B)

  	
   

  	
   

  
	
   

  	
  A

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Where:

  	
   X =

  	
  the number of
  Warrant Shares that shall be issued to the Registered Holder;

  
	
   

  	
   

  	
   

  
	
   

  	
  Y =

  	
  the number of
  Warrant Shares for which this Warrant is being exercised (which shall include
  both the number of Warrant Shares issued to the Registered Holder and the
  number of Warrant Shares subject to the portion of the Warrant being
  cancelled in payment of the Purchase Price);

  
	
   

  	
   

  	
   

  
	
   

  	
  A =

  	
  the Fair Market
  Value (as defined below) of one share of Common Stock; and

  
	
   

  	
   

  	
   

  
	
   

  	
  B =

  	
  the Purchase
  Price then in effect.

  
				



 


(ii)           The
Fair Market Value per share of Common Stock shall be determined as follows:


(A)          If
the Common Stock is listed on a national securities exchange, the Nasdaq
National Market or another nationally recognized trading system as of the
Exercise Date, the Fair Market Value per share of Common Stock shall be deemed
to be the average of the high and low reported sale prices per share of Common
Stock thereon for the 10 day trading period immediately preceding the Exercise
Date or, if otherwise traded in an over-the-counter market, the fair market
value per share of the Common Stock shall be deemed to be the average of the
reported closing bid and ask prices of the Common Stock on the day immediately
prior to the exercise of this Warrant; (provided that if no such price
is reported on such day, the Fair Market Value per share of Common Stock shall
be determined pursuant to clause (B)).


(B)           If
the Common Stock is not listed on a national securities exchange, the Nasdaq
National Market or another nationally recognized trading system as of the
Exercise Date, the Fair Market Value per share of Common Stock shall be deemed
to be the amount most recently determined by the Board of Directors of the
Company (the “Board”) to represent the fair market value per share of the Common
Stock (including without limitation a determination for purposes of granting
Common Stock options or issuing Common Stock under any plan, agreement or
arrangement with employees of the Company); and, upon request of the Registered
Holder, the Board (or a representative thereof) shall, as promptly as
reasonably practicable but in any event not later than 10 days after such
request, notify the Registered Holder of the Fair Market Value per share of
Common Stock and furnish the Registered Holder with reasonable documentation of
the Board’s determination of such Fair Market Value.  Notwithstanding the foregoing, if the Board
has not made such a determination within the three-month period prior to the
Exercise Date, then (A) the Board shall make, and shall provide or cause
to be provided to the Registered Holder notice of, a determination of the Fair
Market Value per share of the Common Stock within 15 days of a request by the
Registered Holder that


 


2





















 


it do so,
and (B) the exercise of this Warrant pursuant to this subsection 1(b)
shall be delayed until such determination is made and notice thereof is
provided to the Registered Holder.


(c)           Exercise
Date.  Each exercise of this Warrant
shall be deemed to have been effected immediately prior to the close of
business on the day on which this Warrant shall have been surrendered to the
Company as provided in subsection 1(a) or 1(b) above (the “Exercise Date”).  At such time, the person or persons in whose
name or names any certificates for Warrant Shares shall be issuable upon such
exercise as provided in subsection 1(d) below shall be deemed to have become
the holder or holders of record of the Warrant Shares represented by such
certificates.


(d)           Issuance
of Certificates.  As soon as
practicable after the exercise of this Warrant in whole or in part, and in any
event within 10 days thereafter, the Company, at its expense, will cause to be
issued in the name of, and delivered to, the Registered Holder, or as the Registered
Holder (upon payment by the Registered Holder of any applicable transfer taxes)
may direct:


(i)            a
certificate or certificates for the number of full Warrant Shares to which the
Registered Holder shall be entitled upon such exercise plus, in lieu of any
fractional share to which the Registered Holder would otherwise be entitled,
cash in an amount determined pursuant to Section 3 hereof; and


(ii)           in
case such exercise is in part only, a new warrant or warrants (dated the date
hereof) of like tenor, calling in the aggregate on the face or faces thereof
for the number of Warrant Shares equal (without giving effect to any adjustment
therein) to the number of such shares called for on the face of this Warrant
minus the number of Warrant Shares for which this Warrant was so exercised
(which, in the case of an exercise pursuant to subsection 1(b), shall include
both the number of Warrant Shares issued to the Registered Holder pursuant to
such partial exercise and the number of Warrant Shares subject to the portion
of the Warrant being cancelled in payment of the Purchase Price).


2.             Adjustments.


(a)           Adjustment
for Stock Splits and Combinations. 
If the Company shall at any time or from time to time after the date of
this Warrant effect a subdivision of the outstanding Common Stock, the Purchase
Price then in effect immediately before that subdivision shall be
proportionately decreased.  If the
Company shall at any time or from time to time after the Date of this Warrant
combine the outstanding shares of Common Stock, the Purchase Price then in
effect immediately before the combination shall be proportionately
increased.  Any adjustment under this
paragraph shall become effective at the close of business on the date the
subdivision or combination becomes effective.


(b)           Adjustment
for Certain Dividends and Distributions. 
In the event the Company at any time, or from time to time after the
date of this Warrant shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in additional shares of Common Stock, then and in
each such event the Purchase Price then in effect immediately before such event
shall be decreased as


 


3





















 


of the time
of such issuance or, in the event such a record date shall have been fixed, as
of the close of business on such record date, by multiplying the Purchase Price
then in effect by a fraction:


(A)          the
numerator of which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or the close of
business on such record date, and


(B)           the
denominator of which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or the close of
business on such record date plus the number of shares of Common Stock issuable
in payment of such dividend or distribution;


provided, however, that if such record date shall have
been fixed and such dividend is not fully paid or if such distribution is not
fully made on the date fixed therefor, the Purchase Price shall be recomputed
accordingly as of the close of business on such record date and thereafter the
Purchase Price shall be adjusted pursuant to this paragraph as of the time of
actual payment of such dividends or distributions.


(c)           Adjustment
in Number of Warrant Shares.  When
any adjustment is required to be made in the Purchase Price pursuant to
subsections 2(a) or 2(b), the number of Warrant Shares purchasable upon
the exercise of this Warrant shall be changed to the number determined by
dividing (i) an amount equal to the number of shares issuable upon the
exercise of this Warrant immediately prior to such adjustment, multiplied by
the Purchase Price in effect immediately prior to such adjustment, by
(ii) the Purchase Price in effect immediately after such adjustment.


(d)               Adjustments
for Other Dividends and Distributions. 
In the event the Company at any time or from time to time after the date
of this Warrant shall make or issue, or fix a record date for the determination
of holders of Common Stock entitled to receive, a dividend or other
distribution payable in securities of the Company (other than shares of Common
Stock) or in cash or other property (other than regular cash dividends paid out
of earnings or earned surplus, determined in accordance with generally accepted
accounting principles), then and in each such event provision shall be made so
that the Registered Holder shall receive upon exercise hereof, in addition to
the number of shares of Common Stock issuable hereunder, the kind and amount of
securities of the Company, cash or other property which the Registered Holder
would have been entitled to receive had this Warrant been exercised on the date
of such event and had the Registered Holder thereafter, during the period from
the date of such event to and including the Exercise Date, retained any such
securities receivable during such period, giving application to all adjustments
called for during such period under this Section 2 with respect to the rights
of the Registered Holder.


(e)           Adjustment
for Reorganization.  If there shall
occur any reorganization, recapitalization, reclassification, consolidation or
merger involving the Company in which the Common Stock is converted into or
exchanged for securities, cash or other property (other than a transaction
covered by subsections 2(b), 2(c) or 2(e)) (collectively, a “Reorganization”),
then, following such Reorganization, the Registered Holder shall receive upon
exercise hereof the kind 


 


4





















 


and
amount of securities, cash or other property which the Registered Holder would
have been entitled to receive pursuant to such Reorganization if such exercise
had taken place immediately prior to such Reorganization.  Notwithstanding the foregoing sentence, if
(x) there shall occur any Reorganization in which the Common Stock is
converted into or exchanged for anything other than solely equity securities,
and (y) the common stock of the acquiring or surviving company is publicly
traded, then, as part of such Reorganization, (i) the Registered Holder
shall have the right thereafter to receive upon the exercise hereof such number
of shares of common stock of the acquiring or surviving company as is
determined by multiplying (A) the number of shares of Common Stock subject
to this Warrant immediately prior to such Reorganization by (B) a
fraction, the numerator of which is the Fair Market Value per share of Common
Stock as of the effective date of such Reorganization, as determined pursuant
to subsection 1(b)(ii), and the denominator of which is the fair market value
per share of common stock of the acquiring or surviving company as of the
effective date of such transaction, as determined in good faith by the Board
(using the principles set forth in subsection 1(b)(ii) to the extent
applicable), and (ii) the exercise price per share of common stock of the
acquiring or surviving company shall be the Purchase Price divided by the
fraction referred to in clause (B) above. 
In any such case, appropriate adjustment (as determined in good faith by
the Board) shall be made in the application of the provisions set forth herein
with respect to the rights and interests thereafter of the Registered Holder,
to the end that the provisions set forth in this Section 2 (including
provisions with respect to changes in and other adjustments of the Purchase
Price) shall thereafter be applicable, as nearly as reasonably may be, in relation
to any securities, cash or other property thereafter deliverable upon the
exercise of this Warrant.


(f)            Certificate
as to Adjustments.  Upon the
occurrence of each adjustment or readjustment of the Purchase Price pursuant to
this Section 2, the Company at its expense shall, as promptly as reasonably
practicable but in any event not later than 10 days thereafter, compute such
adjustment or readjustment in accordance with the terms hereof and furnish to
the Registered Holder a certificate setting forth such adjustment or
readjustment (including the kind and amount of securities, cash or other
property for which this Warrant shall be exercisable and the Purchase Price)
and showing in detail the facts upon which such adjustment or readjustment is
based.  The Company shall, as promptly as
reasonably practicable after the written request at any time of the Registered
Holder (but in any event not later than 10 days thereafter), furnish or cause
to be furnished to the Registered Holder a certificate setting forth (i) the
Purchase Price then in effect and (ii) the number of shares of Common
Stock and the amount, if any, of other securities, cash or property which then
would be received upon the exercise of this Warrant.


3.             Fractional Shares.  The Company shall not be
required upon the exercise of this Warrant to issue any fractional shares, but
shall pay the value thereof to the Registered Holder in cash on the basis of
the Fair Market Value per share of Common Stock, as determined pursuant to
subsection 1(b)(ii) above.


4.             Investment Representations.  The initial
Registered Holder represents and warrants to the Company as follows:


(a)           Investment.  It is acquiring the Warrant, and (if and when
it exercises this Warrant) it will acquire the Warrant Shares, for its own account
for investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with any present intention of 


 


5





















 


distributing
or selling the same; and the Registered Holder has no present or contemplated
agreement, undertaking, arrangement, obligation, indebtedness or commitment
providing for the disposition thereof.


(b)           Accredited
Investor.  The Registered Holder is
an “accredited investor” as defined in Rule 501(a) under the Securities Act of
1933, as amended (the “Act”).


(c)           Experience.  The Registered Holder has made such inquiry
concerning the Company and its business and personnel as it has deemed
appropriate; and the Registered Holder has sufficient knowledge and experience in
finance and business that it is capable of evaluating the risks and merits of
its investment in the Company.


5.             Transfers, etc.


(a)           This
Warrant and the Warrant Shares shall not be sold or transferred unless either
(i) they first shall have been registered under the Act, or (ii) the
Company first shall have been furnished with an opinion of legal counsel,
reasonably satisfactory to the Company, to the effect that such sale or
transfer is exempt from the registration requirements of the Act.  Notwithstanding the foregoing, no
registration or opinion of counsel shall be required for (i) a transfer by
a Registered Holder which is an entity to an affiliate or wholly owned
subsidiary of such entity, a transfer by a Registered Holder which is a
partnership to a partner of such partnership or a retired partner of such
partnership or to the estate of any such partner or retired partner, or a
transfer by a Registered Holder which is a limited liability company to a
member of such limited liability company or a retired member or to the estate
of any such member or retired member, provided that the transferee in
each case agrees in writing to be subject to the terms of this Section 5,
or (ii) a transfer made in accordance with Rule 144 under the Act.


(b)           Each
certificate representing Warrant Shares shall bear a legend substantially in
the following form:


“The securities
represented by this certificate have not been registered under the Securities
Act of 1933, as amended, and may not be offered, sold or otherwise transferred,
pledged or hypothecated unless and until such securities are registered under
such Act or an opinion of counsel satisfactory to the Company is obtained to
the effect that such registration is not required.”


The foregoing legend shall be removed from the
certificates representing any Warrant Shares, at the request of the holder
thereof, at such time as they become eligible for resale pursuant to
Rule 144(k) under the Act.


(c)           The
Company will maintain a register containing the name and address of the Registered
Holder of this Warrant.  The Registered
Holder may change its address as shown on the warrant register by written
notice to the Company requesting such change.


(d)           Subject
to the provisions of Section 5 hereof, this Warrant and all rights hereunder
are transferable, in whole or in part, upon surrender of this Warrant with a
properly 


 


6





















 


executed
assignment (in the form of Exhibit II hereto) at the principal
office of the Company (or, if another office or agency has been designated by
the Company for such purpose, then at such other office or agency).


6.             No Impairment.  The Company will not, by
amendment of its charter 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, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Registered
Holder against impairment.


7.             Notices of Record Date, etc.  In the event:


(a)           the
Company shall take a record of the holders of its Common Stock (or other stock
or securities at the time deliverable upon the exercise of this Warrant) for
the purpose of entitling or enabling them to receive any dividend or other
distribution, or to receive any right to subscribe for or purchase any shares
of stock of any class or any other securities, or to receive any other right;
or


(b)           of
any capital reorganization of the Company, any reclassification of the Common
Stock of the Company, any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which the Company
is the surviving entity and its Common Stock is not converted into or exchanged
for any other securities or property), or any transfer of all or substantially
all of the assets of the Company; or


(c)           of
the voluntary or involuntary dissolution, liquidation or winding-up of the
Company, then, and in each such case, the Company will send or cause to be sent
to the Registered Holder a notice specifying, as the case may be, (i) the
record date for such dividend, distribution or right, and the amount and
character of such dividend, distribution or right, or (ii) the effective date
on which such reorganization, reclassification, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place, and the
time, if any is to be fixed, as of which the holders of record of Common Stock
(or such other stock or securities at the time deliverable upon the exercise of
this Warrant) shall be entitled to exchange their shares of Common Stock (or
such other stock or securities) for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation or winding-up. 
Such notice shall be sent at least 10 days prior to the record date or
effective date for the event specified in such notice.


8.             Reservation of Stock.  The Company
will at all times reserve and keep available, solely for issuance and delivery
upon the exercise of this Warrant, such number of Warrant Shares and other
securities, cash and/or property, as from time to time shall be issuable upon
the exercise of this Warrant.


 


7





















 


9.             Exchange or Replacement of Warrants.


(a)           Upon
the surrender by the Registered Holder, properly endorsed, to the Company at
the principal office of the Company, the Company will, subject to the
provisions of Section 5 hereof, issue and deliver to or upon the order of the
Registered Holder, at the Company’s expense, a new Warrant or Warrants of like
tenor, in the name of the Registered Holder or as the Registered Holder (upon
payment by the Registered Holder of any applicable transfer taxes) may direct,
calling in the aggregate on the face or faces thereof for the number of shares
of Common Stock (or other securities, cash and/or property) then issuable upon
exercise of this Warrant.


(b)           Upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and (in the case of loss, theft or
destruction) upon delivery of an indemnity agreement (with surety if reasonably
required) in an amount reasonably satisfactory to the Company, or (in the case
of mutilation) upon surrender and cancellation of this Warrant, the Company
will issue, in lieu thereof, a new Warrant of like tenor.


10.           Notices. 
All notices and other communications from the Company to the Registered
Holder in connection herewith shall be mailed by certified or registered mail,
postage prepaid, or sent via a reputable nationwide overnight courier service
guaranteeing next business day delivery, to the address last furnished to the
Company in writing by the Registered Holder. 
All notices and other communications from the Registered Holder to the
Company in connection herewith shall be mailed by certified or registered mail,
postage prepaid, or sent via a reputable nationwide overnight courier service
guaranteeing next business day delivery, to the Company at its principal office
set forth below.  If the Company should
at any time change the location of its principal office to a place other than
as set forth below, it shall give prompt written notice to the Registered
Holder and thereafter all references in this Warrant to the location of its
principal office at the particular time shall be as so specified in such
notice. All such notices and communications shall be deemed delivered
(i) two business days after being sent by certified or registered mail,
return receipt requested, postage prepaid, or (ii) one business day after
being sent via a reputable nationwide overnight courier service guaranteeing
next business day delivery.


11.           No
Rights as Stockholder.  Until the exercise of this
Warrant, the Registered Holder shall not have or exercise any rights by virtue
hereof as a stockholder of the Company.  Notwithstanding
the foregoing, in the event (i) the Company effects a split of the Common
Stock by means of a stock dividend and the Purchase Price of and the number of
Warrant Shares are adjusted as of the date of the distribution of the dividend
(rather than as of the record date for such dividend), and (ii) the
Registered Holder exercises this Warrant between the record date and the
distribution date for such stock dividend, the Registered Holder shall be
entitled to receive, on the distribution date, the stock dividend with respect
to the shares of Common Stock acquired upon such exercise, notwithstanding the
fact that such shares were not outstanding as of the close of business on the
record date for such stock dividend.


12.           Amendment
or Waiver.  Any term of this Warrant may be amended or
waived only by an instrument in writing signed by the party against which
enforcement of the change or waiver is sought. 
No waivers of any term, condition or provision of this Warrant, in any
one or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such term, condition or provision.


 


8





















 


13.           Section
Headings.  The section headings in this Warrant are for
the convenience of the parties and in no way alter, modify, amend, limit or
restrict the contractual obligations of the parties.


14.           Governing
Law.  This Warrant will be governed by and
construed in accordance with the internal laws of the State of Colorado
(without reference to the conflicts of law provisions thereof).


15.           Facsimile
Signatures. This
Warrant may be executed by facsimile signature.


EXECUTED as of the Date of Issuance indicated above.


	
   

  	
  MAUNA KEA ENTERPRISES,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Kreloff

  
	
   

  	
  Title:

  	
  CEO

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


 


9

















 


EXHIBIT I


PURCHASE FORM


	
  To:

  	
   

  	
  Dated:

  



 


The undersigned, pursuant to the provisions set forth
in the attached Warrant, hereby elects to purchase (check
applicable box):


o                     
shares of the Common Stock of Mauna Kea Enterprises, Inc. covered by such
Warrant; or


o            the
maximum number of shares of Common Stock covered by such Warrant pursuant to
the cashless exercise procedure set forth in subsection 1(b).


The undersigned herewith makes payment of the full
purchase price for such shares at the price per share provided for in such
Warrant.  Such payment takes the form of (check applicable box or boxes):


o            $         
in lawful money of the United States; and/or


o            the cancellation of such portion of the attached
Warrant as is exercisable for a total of          
Warrant Shares (using a Fair Market Value of $         
per share for purposes of this calculation) ; and/or


o            the cancellation of such number of Warrant Shares as
is necessary, in accordance with the formula set forth in subsection 1(b),
to exercise this Warrant with respect to the maximum number of Warrant Shares
purchasable pursuant to the cashless exercise procedure set forth in
subsection 1(b).


	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  



 


 


10

















 


EXHIBIT II


ASSIGNMENT FORM


FOR VALUE RECEIVED,                                                                
hereby sells, assigns and transfers all of the rights of the undersigned under
the attached Warrant with respect to the number of shares of Common Stock of
Mauna Kea Enterprises, Inc. covered thereby set forth below, unto:


	
  Name of
  Assignee

  	
   

  	
  Address

  	
   

  	
  No. of
  Shares

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
  Dated:

  	
   

  	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature
  Guaranteed:

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  



 


The signature should be guaranteed by an eligible
guarantor institution (banks, stockbrokers, savings and loan associations and
credit unions with membership in an approved signature guarantee medallion
program) pursuant to Rule 17Ad-15 under the Securities Exchange Act
of 1934.


 


 


11