Document:

exhibit_4-2.htm

    
      

    

    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 VALCENT PRODUCTS INC. SHALL HAVE RECEIVED AN OPINION OF
COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER
THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

    

    UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS WARRANT AND THE
SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE MUST NOT TRADE THE SECURITY BEFORE
NOVEMBER 17, 2008.

    

    

    

    WARRANT
TO PURCHASE

    

    SHARES OF
COMMON STOCK

    

    OF

    

    VALCENT
PRODUCTS INC.

    

    

    Expires
July 16, 2013

    

    
       

      
        	No.: W-A-2	
                 Number of
      Shares:  ________

              

      

      Date of
Issuance: July 16, 2008

    

    

    

    FOR VALUE
RECEIVED, subject to the provisions hereinafter set forth, the undersigned,
Valcent Products Inc., a corporation organized under the laws of the Province of
Alberta, Canada (together with its successors and assigns, the “Issuer”), hereby
certifies that __________ or its registered assigns is entitled to subscribe for
and purchase, during the period specified in this Warrant, up to ____________
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 9
hereof.

    

    1.           Term.  The
right to subscribe for and purchase shares of Warrant Stock represented hereby
shall commence on July 16, 2008 and shall expire at 5:00 p.m., eastern time, on
July 16, 2013 (such period being the “Term”).

    
      
         

      

      
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    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 at any time and from time to time during the
Term commencing on July 14, 2008.

    

    (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 at such Holder’s election (i) by certified or official bank
check or by wire transfer to an account designated by the Issuer, (ii) by
“cashless exercise” in accordance with the provisions of subsection (c) of this
Section 2, or (iii) by a combination of the foregoing methods of payment
selected by the Holder of this Warrant.

    

    (c)          Cashless
Exercise.  Notwithstanding any provisions herein to the
contrary and commencing 180 days following the Original Issue Date, if the Per
Share Market Value of one share of Common Stock is greater than the Warrant
Price (at the date of calculation as set forth below), in lieu of exercising
this Warrant by payment of cash, the Holder may exercise this Warrant by a
cashless exercise and shall receive the number of shares of Common Stock equal
to an amount (as determined below) by surrender of this Warrant at the principal
office of the Issuer together with the properly endorsed Notice of Exercise in
which event the Issuer shall issue to the Holder a number of shares of Common
Stock computed using the following formula:

    

    X = Y - (A)(Y)

                     B

    

    
      	
              Where

            	
              X
      =

            	
              the
      number of shares of Common Stock to be issued to the
    Holder.

            

    

    

    
      	
               
      

            	
              Y
      =

            	
              the
      number of shares of Common Stock purchasable upon exercise of all of the
      Warrant or, if only a portion of the Warrant is being exercised, the
      portion of the Warrant being
exercised.

            

    

    

    
      	
               
      

            	
              A
      =

            	
              the
      Warrant Price.

            

    

    

    B
=          the Per Share
Market Value of one share of Common Stock.

    

    (d)          Issuance of Stock
Certificates.  In the event of any exercise of the rights
represented by this Warrant in accordance with and subject to the terms and
conditions hereof, (i) 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 three (3) Trading Days after such
exercise (the “Delivery Date”) or,
if the Issuer’s Securities are eligible for such manner of delivery, then at the
request of the Holder, issued and delivered to the Depository Trust Company
(“DTC”) account
on the Holder’s behalf via the Deposit Withdrawal Agent Commission System
(“DWAC”) within
a reasonable time, not exceeding three (3) Trading Days after such exercise, and
the Holder hereof shall be deemed for all purposes to be the Holder of the
shares of Warrant Stock so purchased as of the date of such exercise and (ii)
unless this Warrant has expired, a new Warrant representing the number of shares
of Warrant Stock, if any, with respect to which this Warrant shall not then have
been exercised (less any amount thereof which shall have been canceled in
payment or partial payment of the Warrant Price as hereinabove provided) shall
also be issued to the Holder hereof at the Issuer’s expense within such
time.

    
      
         

      

      
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    (e)          Transferability of
Warrant.  Subject to the prior written consent of the Company,
which consent will not be unreasonably withheld, and subject to Section 2(g),
this Warrant may be transferred by a Holder 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
the Holder’s duly authorized attorney, upon surrender of this Warrant at the
principal office of the Issuer, 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 for the purchase of 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.

    
      
         

      

      
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    (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 VALCENT PRODUCTS INC. SHALL HAVE RECEIVED AN OPINION OF
COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER
THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

    

    UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS WARRANT AND THE
SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE MUST NOT TRADE THE SECURITY BEFORE
NOVEMBER 17, 2008.

    

    (iii)          The
restrictions imposed by this subsection (g) upon the transfer of this Warrant or
the shares of Warrant Stock to be purchased upon exercise hereof shall terminate
(A) when such securities shall have been resold pursuant to an effective
registration statement under the Securities Act, (B) upon the Issuer’s receipt
of an opinion of counsel, in form and substance reasonably satisfactory to the
Issuer, addressed to the Issuer to the effect that such restrictions are no
longer required to ensure compliance with the Securities Act and state
securities laws or (C) upon the Issuer’s receipt of other evidence reasonably
satisfactory to the Issuer that such registration and qualification under the
Securities Act and state securities laws are not required.  Whenever
such restrictions shall cease and terminate as to any such securities, the
Holder thereof shall be entitled to receive from the Issuer (or its transfer
agent and registrar), without expense (other than applicable transfer taxes, if
any), new Warrants (or, in the case of shares of Warrant Stock, new stock
certificates) of like tenor not bearing the applicable legend required by
paragraph (ii) above relating to the Securities Act and state securities
laws.

     

     

    
 

    
      
        
        

      

      
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    (h)          Buy In.

     

    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.

    

    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, upon issuance, be duly authorized, validly
issued, fully paid and non-assessable and free from all taxes, liens and charges
created by or through 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 the issue upon
exercise of this Warrant a number of shares of Common Stock equal to at least
120% of the aggregate number of shares of Common Stock exercisable hereunder to
provide for the exercise of this Warrant (without regard to limitations on
exercisability set forth in Section 8).

    

    (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, and, to the extent permissible under the
applicable securities exchange’s 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.

    
      
         

      

      
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    (c)          Covenants.  The
Issuer shall not by any action including, without limitation, amending the
Certificate 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
Certificate 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.

    

    (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 Warrant Share Number.  The number of shares of Common Stock
for which this Warrant is exercisable, and the price at which such shares may be
purchased upon exercise of this Warrant, 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 Section 5.  Notwithstanding any
adjustment hereunder, at no time shall the Warrant Price be greater than $0.55
per share, except if it is adjusted pursuant to Section 4(b)(iii).

     

     

     

     

    
 

    
      
        
        

      

      
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    (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 with or merge 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 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 in effect at the time immediately prior to 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 (without giving effect to the limitations on
exercise set forth in Section 8 hereof) immediately prior thereto (including the
right to elect the type of consideration, if applicable), subject to adjustments
(subsequent to such corporate action) as nearly equivalent as possible to the
adjustments provided for elsewhere in this Section 4.  Unless the
surviving entity in any such Triggering Event is a public company under the
Securities Exchange Act of 1934, the common equity securities of which are
traded or quoted on a national securities exchange or the OTC Bulletin Board (a
“Qualifying
Entity”), the Holder, at its option, shall be permitted to require that
the Issuer pay to the Holder an amount equal to the Black-Scholes value of this
Warrant.

    

    (ii)          
    Notwithstanding anything contained in this Warrant to
the contrary and so long as the surviving entity is a Qualifying Entity, the
Issuer will not be deemed to have effected  any Triggering Event if,
prior to the consummation thereof, 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
the Holder of this Warrant and reasonably satisfactory to the Holder, (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
shares of Securities, cash or property as, in accordance with the foregoing
provisions of this subsection (a), such Holder shall be entitled to receive, and
such Person shall have similarly delivered to such Holder, an opinion of counsel
for such Person, which shall be reasonably satisfactory to the Holder, 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
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)             
 set a record date or take a record of the holders of its 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 (without giving effect to the limitations on exercise
set forth in Section 8 hereof), 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 (without giving effect to the limitations on
exercise set forth in Section 8 hereof) divided by (B) the number of shares of
Common Stock for which this Warrant is exercisable immediately after such
adjustment (without giving effect to the limitations on exercise set forth in
Section 8 hereof).

    

    (c)          Certain Other
Distributions.  If at any time the Issuer shall set a record
date or take a record of the holders of its 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, Additional Shares of Common Stock or Permitted Issuances),
or

     

     

    
 

    
      
        
        

      

      
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    (iii)           
 any warrants or other rights to subscribe for or purchase 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, Additional Shares
of Common Stock or Permitted Issuances), then (1)
the number of shares of Common Stock for which this Warrant is exercisable shall
be adjusted to equal the product of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such adjustment (without
giving effect to the limitations on exercise set forth in Section 8 hereof)
multiplied by a fraction (A) the numerator of which shall be the Per Share
Market Value of Common Stock at the date of taking such record and (B) the
denominator of which shall be such Per Share Market Value minus the amount
allocable to one share of Common Stock of any such cash so distributable and of
the fair value (as determined in good faith by the Board of Directors of the
Issuer and supported by an opinion from an investment banking firm reasonably
acceptable to the Holder) of any and all such evidences of indebtedness, shares
of stock, other securities or property or warrants or other subscription or
purchase rights so distributable, 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 (without giving effect to the limitations on
exercise set forth in Section 8 hereof) divided by (B) the number of shares of
Common Stock for which this Warrant is exercisable immediately after such
adjustment (without giving effect to the limitations on exercise set forth in
Section 8 hereof).  A reclassification of the Common Stock (other than
a change in par value, or from par value to no par value or from no par value to
par value) into shares of Common Stock and shares of any other class of stock
shall be deemed a distribution by the Issuer to the holders of its Common Stock
of such shares of such other class of stock within the meaning of this Section
4(c) and, if the outstanding shares of Common Stock shall be changed into a
larger or smaller number of shares of Common Stock as a part of such
reclassification, such change shall be deemed a subdivision or combination, as
the case may be, of the outstanding shares of Common Stock within the meaning of
Section 4(b).

    

    (d)         Issuance of Additional
Shares of Common Stock.

     

    (i)             
 In the event the Issuer shall at any time following the Original Issue
Date issue any Additional Shares of Common Stock (otherwise than as provided in
the foregoing subsections (a) through (c) of this Section 4, and other than
Permitted Issuances), at a price per share less than the Warrant Price then in
effect or without consideration, then the Warrant Price upon each such issuance
shall be adjusted to the price equal to the consideration per share paid for
such Additional Shares of Common Stock.

    

    (ii)             
No adjustment of the Warrant Price shall be made under paragraph (i) of
Section 4(d) upon the issuance of any Additional Shares of Common Stock
which are issued pursuant to the exercise or conversion of any Common Stock
Equivalents if any such adjustment shall previously have been made upon the
issuance of such Common Stock Equivalents, or upon the issuance of any warrant
or other rights therefor pursuant to Sections 4(e) or 4(f), or in connection
with any Permitted Issuances.

     

     

    
 

    
      
         

      

      
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    (e)          Issuance of Warrants or
Other Rights.  If at any time the Issuer shall make or issue or
become irrevocably obligated to issue the Holders of its Common Stock a
distribution of, or shall in any manner (whether directly or by assumption in a
merger in which the Issuer is the surviving corporation) issue or sell any
warrants or options, whether or not immediately exercisable, and the Warrant
Consideration (hereafter defined) per share for which Common Stock is issuable
upon the exercise of such warrant or option shall be less than the Warrant Price
in effect immediately prior to the time of such issue or sale, then the Warrant
Price then in effect immediately prior to the time of such issue or sale, shall
be adjusted to the price equal to the Warrant Consideration per share for which
Common Stock is issuable upon the exercise of such warrant or
option.    No adjustments of the Warrant Price then in
effect shall be made upon the actual issue of such Common Stock or of such
Common Stock Equivalents upon exercise of such warrants or other rights or upon
the actual issue of such Common Stock upon such conversion or exchange of such
Common Stock Equivalents if adjustment has been previously made pursuant to this
section.  No adjustments of the Warrant Price shall be made under this
Section 4(e) in connection with any Permitted Issuances.

    

    (f)          Issuance of Common Stock
Equivalents.  If at any time prior the Issuer shall make or
issue or become irrevocably obligated to issue the Holders of its Common Stock a
distribution of, or shall in any manner (whether directly or by assumption in a
merger in which the Issuer is the surviving corporation) issue or sell, any
Common Stock Equivalents, whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the Common Stock Equivalent
Consideration (hereafter defined) per share for which Common Stock is issuable
upon such conversion or exchange shall be less than the Warrant Price in effect
immediately prior to the time of such issue or sale, or if, after any such
issuance of Common Stock Equivalents, the price per share for which Additional
Shares of Common Stock may be issuable thereafter is amended or adjusted, and
such price as so amended shall be less than the applicable Conversion Price in
effect at the time of such amendment or adjustment, then the Warrant Price then
in effect immediately prior to the time of such issue or sale, shall upon each
such issuance or sale be adjusted to the price equal to the Common Stock
Equivalent Consideration per share paid for such Common Share
Equivalents.  No further adjustment of the Warrant Price then in
effect shall be made under this Section 4(f) upon the issuance of any Common
Stock Equivalents which are issued pursuant to the exercise of any warrants or
other subscription or purchase rights therefor, if any such adjustment shall
previously have been made upon the issuance of such warrants or other rights
pursuant to Section 4(e).  No further adjustments of the Warrant Price
then in effect shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Common Stock Equivalents if adjustment shall have
previously been made pursuant to this section.  No adjustments of the
Warrant Price shall be made under this Section 4(f) in connection with any
Permitted Issuances.

     

     

    
 

    
      
         

      

      
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    (g)          Superseding
Adjustment.  If, at any time after any adjustment of the
Warrant Price then in effect shall have been made pursuant to Section 4(e) or
Section 4(f) as the result of any issuance of warrants, other rights or Common
Stock Equivalents, and (i) such warrants or other rights, or the right of
conversion or exchange in such other Common Stock Equivalents, shall expire, and
all or a portion of such warrants or other rights, or the right of conversion or
exchange with respect to all or a portion of such other Common Stock
Equivalents, as the case may be shall not have been exercised, or (ii) the
consideration per share for which shares of Common Stock are issuable pursuant
to such Common Stock Equivalents, shall be increased solely by virtue of
provisions therein contained for an automatic increase in such consideration per
share upon the occurrence of a specified date or event, then for each
outstanding Warrant such previous adjustment shall be rescinded and annulled and
the Additional Shares of Common Stock which were deemed to have been issued by
virtue of the computation made in connection with the adjustment so rescinded
and annulled shall no longer be deemed to have been issued by virtue of such
computation.  Upon the occurrence of an event set forth in this
Section 4(g) above, there shall be a recomputation made of the effect of
such Common Stock Equivalents on the basis of: (i) treating the number of
Additional Shares of Common Stock or other property, if any, theretofore
actually issued or issuable pursuant to the previous exercise of any such
warrants or other rights or any such right of conversion or exchange, as having
been issued on the date or dates of any such exercise and for the consideration
actually received and receivable therefor, and (ii) treating any such
Common Stock Equivalents which then remain outstanding as having been granted or
issued immediately after the time of such increase of the consideration per
share for which shares of Common Stock or other property are issuable under such
Common Stock Equivalents; whereupon a new adjustment of the Warrant Price then
in effect shall be made, which new adjustment shall supersede the previous
adjustment so rescinded and annulled.

    

    (h)          Purchase of Common Stock by
the Issuer; Below Market Issuances.  If the Issuer at any time
while this Warrant is outstanding shall, directly or indirectly through a
Subsidiary or otherwise, purchase, redeem or otherwise acquire any shares of
Common Stock at a price per share greater than the Per Share Market Value, then
the Warrant Price upon each such purchase, redemption or acquisition shall be
adjusted to that price determined by multiplying such Warrant Price by a
fraction (i) the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such purchase, redemption or acquisition
minus the number of shares of Common Stock which the aggregate consideration for
the total number of such shares of Common Stock so purchased, redeemed or
acquired would purchase at the Per Share Market Value; and (ii) the denominator
of which shall be the number of shares of Common Stock outstanding immediately
after such purchase, redemption or acquisition.  For the purposes of
this subsection (h), the date as of which the Per Share Market Price shall be
computed shall be the earlier of (x) the date on which the Issuer shall enter
into a firm contract for the purchase, redemption or acquisition of such Common
Stock, or (y) the date of actual purchase, redemption or acquisition of such
Common Stock.  For the purposes of this subsection (h), a purchase,
redemption or acquisition of a Common Stock Equivalent shall be deemed to be a
purchase of the underlying Common Stock, and the computation herein required
shall be made on the basis of the full exercise, conversion or exchange of such
Common Stock Equivalent on the date as of which such computation is required
hereby to be made, whether or not such Common Stock Equivalent is actually
exercisable, convertible or exchangeable on such date.  If the Issuer
shall issue Common Stock or rights, options or warrants entitling the recipient
or holder thereof to subscribe for or purchase shares of Common Stock at a price
per share less than the Per Share Market Value on the date of issuance, but
higher than the Warrant Price then in effect, the Warrant Price shall be
multiplied by a fraction, of which the denominator shall be the number of shares
of the Common Stock outstanding on the date of issuance of such Common Stock or
rights or warrants plus the number of additional shares of Common Stock offered
for subscription or purchase, and of which the numerator shall be the number of
shares of the Common Stock outstanding on the date of issuance of such rights or
warrants plus the number of shares which the aggregate offering price of the
total number of shares so offered (assuming receipt by the Issuer in full of all
consideration payable upon exercise of such rights, options or warrants) would
purchase at such Per Share Market Value.  Such adjustment shall be
made whenever such securities are issued, and shall become effective immediately
after the record date (if applicable) for the determination of stockholders
entitled to receive such rights, options or warrants.

     

    
 

    
      
         

      

      
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    (i)           Other Provisions applicable
to Adjustments under this Section.  The following provisions
shall be applicable to the making of adjustments of the number of shares of
Common Stock for which this Warrant is exercisable and the Warrant Price then in
effect provided for in this Section 4:

    

    (i)               
Computation of
Consideration.  To the extent that any Additional Shares of
Common Stock or any Common Stock Equivalents (or any warrants or other rights
therefor) shall be issued for cash consideration, the consideration received by
the Issuer therefor shall be the amount of the cash received by the Issuer
therefor, or, if such Additional Shares of Common Stock or Common Stock
Equivalents are offered by the Issuer for subscription, the subscription price,
or, if such Additional Shares of Common Stock or Common Stock Equivalents are
sold to underwriters or dealers for public offering without a subscription
offering, the initial public offering price (in any such case subtracting any
amounts paid or receivable for accrued interest or accrued dividends and without
taking into account any compensation, discounts or expenses paid or incurred by
the Issuer for and in the underwriting of, or otherwise in connection with, the
issuance thereof).  To the extent that such issuance shall be for a
consideration other than cash, then, except as herein otherwise expressly
provided, the amount of such consideration shall be deemed to be the fair value
of such consideration at the time of such issuance as mutually de­termined
in good faith by the Board of Directors of the Issuer and the Majority
Holders.  The consideration for any Additional Shares of Common Stock
issuable pursuant to any warrants or other rights to subscribe for or purchase
the same shall be the consideration received by the Issuer for issuing such
warrants or other rights divided by the number of shares of Common Stock
issuable upon the exercise of such warrant or right plus the additional
con­sideration payable to the Issuer upon exercise of such warrant or other
right for one share of Common Stock (together the “Warrant
Consideration”).  The consideration for any Additional Shares of
Common Stock issuable pursuant to the terms of any Common Stock Equivalents
shall be the consideration received by the Issuer for issuing such Common Stock
Equivalent, divided by the number of shares of Common Stock issuable upon the
conversion or other exercise of such Common Stock Equivalent, plus the
additional consideration, if any, payable to the Issuer upon the exercise of the
right of conversion or exchange in such Common Stock Equivalent for one share of
Common Stock (together the “Common Stock Equivalent
Consideration”).  In case of the issuance at any time of any
Additional Shares of Common Stock or Common Stock Equivalents in payment or
satisfaction of any dividends upon any class of stock other than Common Stock,
the Issuer shall be deemed to have received for such Additional Shares of Common
Stock or Common Stock Equivalents a consideration equal to the amount of such
dividend so paid or satisfied.

     

    
 

    
      
         

      

      
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    (ii)             
Adjustments of Number
of Shares.  In connection with an adjustment of the Warrant
Price pursuant to Sections (d), (e), (f), (g) and (h) of this
Section 4, the number of shares of Common Stock issuable hereunder shall be
increased such that the aggregate Warrant Price payable hereunder, after taking
into account the decrease in the Exercise Price, shall be equal to the aggregate
Warrant Price prior to such adjustment.

    

    (iii)            
Fractional
Interests.  In computing adjustments under this Section 4,
fractional interests in Common Stock shall be taken into account to the nearest
one one-hundredth (1/100th) of a
share.

    

    (iv)            
When Adjustment Not
Required.  If the Issuer shall take a record of the holders of
its Common Stock for the purpose of entitling them to receive a dividend or
distribution or subscription or purchase rights and shall, thereafter and before
the distribution to stockholders thereof, legally abandon its plan to pay or
deliver such dividend, distribution, subscription or purchase rights, then
thereafter no adjustment shall be required by reason of the taking of such
record and any such adjustment previously made in respect thereof shall be
rescinded and annulled.

    

    (j)           Form of Warrant after
Adjustments.  The form of this Warrant need not be changed
because of any adjustments in the Warrant Price or the number and kind of
securities purchasable upon exercise of this Warrant.

    

    (k)           Escrow of
Property.  If after any property becomes distributable pursuant
to this Section 4 by reason of the taking of any record of the holders of Common
Stock, but prior to the occurrence of the event for which such record is taken,
and the Holder exercises this Warrant, such property shall be held in escrow for
the Holder by the Issuer to be distributed to the Holder upon and to the extent
that the event actually takes place, upon payment of the then current Warrant
Price.  Notwithstanding any other provision to the contrary herein, if
the event for which such record was taken fails to occur or is rescinded, then
such escrowed property shall be returned to the Issuer.

     

    
 

    
      
         

      

      
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    5.           Notice of
Adjustments.  Whenever the Warrant Price or Warrant Share
Number shall be adjusted pursuant to Section 4 hereof (for purposes of this
Section 5, each an “adjustment”), the Issuer shall cause its Chief
Financial Officer to prepare and execute a certificate setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated (including a
description of the basis on which the Board made any determination hereunder),
and the Warrant Price and Warrant Share Number after giving effect to such
adjustment, and shall cause copies of such certificate to be delivered to the
Holder of this Warrant promptly after each adjustment.  Any dispute
between the Issuer and the Holder of this Warrant with respect to the matters
set forth in such certificate may at the option of the Holder of this Warrant be
submitted to one of the national accounting firms currently known as the “big
four” selected by the Holder, provided that the
Issuer shall have ten (10) days after receipt of notice from such Holder of its
selection of such firm to object thereto, in which case such Holder shall select
another such firm and the Issuer shall have no such right of
objection.  The firm selected by the Holder of this Warrant as
provided in the preceding sentence shall be instructed to deliver a written
opinion as to such matters to the Issuer and such Holder within thirty (30) days
after submission to it of such dispute.  Such opinion shall be final
and binding on the parties hereto.

    

    6.           Fractional
Shares.  No fractional shares of Warrant Stock will be issued
in connection with any exercise hereof, but in lieu of such fractional shares,
the Issuer shall at its option either (a) make a cash payment therefor equal in
amount to the product of the applicable fraction multiplied by the Per Share
Market Value then in effect or (b) issue one whole share in lieu of such
fractional share.

    

    7.           [Intentionally
Reserved].

    

    8.          
Certain Exercise
Restrictions.

     

    (a)          Notwithstanding
anything to the contrary set forth in this Warrant, at no time may a holder of
this Warrant exercise this Warrant if the number of shares of Common Stock to be
issued pursuant to such exercise would exceed, when aggregated with all other
shares of Common Stock owned by such holder at such time, the number of shares
of Common Stock which would result in such holder beneficially owning (as
determined in accordance with Section 13(d) of the Securities Exchange Act
of 1934, as amended, and the rules thereunder) in excess of 9.99% of all of the
Common Stock outstanding at such time; provided, however, that upon a holder of
this Warrant providing the Issuer with sixty-one (61) days notice (pursuant to
Section 13 hereof) (the “Waiver Notice”) that such holder would like to
waive this Section 8 with regard to any or all shares of Common Stock
issuable upon exercise of this Warrant, this Section 8 will be of no force
or effect with regard to all or a portion of the Warrant referenced in the
Waiver Notice; provided, further, that this Section 8(a) shall be of no further
force or effect during the sixty-one (61) days immediately preceding the
expiration of the term of this Warrant.

     

     

    
      
         

      

      
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    9.           Definitions.  For
the purposes of this Warrant, the following terms have the following
meanings:

    

    “Additional Shares of Common
Stock” means all shares of Common Stock issued by the Issuer after the
Original Issue Date, and all shares of Other Common, if any, issued by the
Issuer after the Original Issue Date, except for Permitted
Issuances.

    

    “Board” shall mean the
Board of Directors of the Issuer.

    

    “Business Day” shall
mean, even if not capitalized, any day banking transactions can be conducted in
both New York City, NY, USA and Vancouver, British Columbia, Canada,
and  does not include any day which is a federal, state or provincial
holiday in either location.

    

    “Capital Stock” means
and includes (i) any and all shares, interests, participations or other
equivalents of or interests in (however designated) corporate stock, including,
without limitation, shares of preferred or preference stock, (ii) all
partnership interests (whether general or limited) in any Person which is a
partnership, (iii) all membership interests or limited liability company
interests in any limited liability company, and (iv) all equity or ownership
interests in any Person of any other type.

    

    “Certificate of
Incorporation” means the Amended and Restated Certificate of
Incorporation of the Issuer as in effect on the Original Issue Date, and as
hereafter from time to time amended, modified, supplemented or restated in
accordance with the terms hereof and thereof and pursuant to applicable
law.

    

    “Common Stock” means
the Common Stock, no par value per share, of the Issuer and any other Capital
Stock into which such stock may hereafter be changed.

    

    “Common Stock
Equivalent” means any Convertible Security or warrant, option or other
right to subscribe for or purchase any Additional Shares of Common Stock or any
Convertible Security.

    

    “Common Stock Equivalent
Consideration” has the meaning specified in Section 4 (i) (i)
hereof.

    

    “Convertible
Securities” means evidences of Indebtedness, shares of Capital Stock or
other Securities which are or may be at any time convertible into or
exchangeable for Additional Shares of Common Stock.  The term
“Convertible Security” means one of the Convertible Securities.

     

    
 

    
      
         

      

      
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    “Governmental
Authority” means any governmental, regulatory or self-regulatory entity,
department, body, official, authority, commission, board, agency or
instrumentality, whether federal, state or local, and whether domestic or
foreign.

    

    “Holders” mean the
Persons who shall from time to time own any Warrant.  The term
“Holder” means one of the Holders.

    

    “Independent
Appraiser” means a nationally recognized or major regional investment
banking firm or firm of independent certified public accountants of recognized
standing (which may be the firm that regularly examines the financial statements
of the Issuer) that is regularly engaged in the business of appraising the
Capital Stock or assets of corporations or other entities as going concerns, and
which is not affiliated with either the Issuer or the Holder of any
Warrant.

    

    “Issuer” means Valcent
Products Inc., a corporation organized under the laws of the Province of
Alberta, Canada, and its successors.

    

    “Majority Holders”
means at any time the Holders of Warrants, substantially in the form of this
Warrant and issued on the Original Issue Date, exercisable for a majority of the
shares of Warrant Stock issuable under the Warrants at the time
outstanding.

    

    “Notes”
shall have the meaning set forth in the Purchase Agreement.

    

    “Original Issue Date”
means July 16, 2008.

    

    “OTC Bulletin Board”
means the over-the-counter electronic bulletin board.

    

    “Other Common” means
any other Capital Stock of the Issuer of any class which shall be authorized at
any time after the date of this Warrant (other than Common Stock) and which
shall have the right to participate in the distribution of earnings and assets
of the Issuer without limitation as to amount.

     

     

     

    
 

    
      
        
        

      

      
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    “Permitted Issuances”
means (a) issuances of options, stock grants or bonus shares issued to
employees, officers or directors of the Issuer pursuant to any compensatory
stock option plan existing on the date hereof (and not amended to increase the
shares available thereunder) if such grants were duly approved by a majority of
the non-employee members of the Board of Directors of the Issuer or a majority
of the members of a committee of non-employee directors established for such
purpose and such options have an exercise price in excess of the Closing Bid
Price (as defined in the Notes) on the date of grant; (b) issuances of
securities upon the exercise or exchange of or conversion of any securities
issued hereunder and/or securities exercisable or exchangeable for or
convertible into shares of Common Stock issued and outstanding on the Original
Issue Date, provided that such securities have not been amended since the
Original
Issue Date to increase the number of such securities or to decrease the
exercise, exchange or conversion price of any such securities; (c) securities
issued pursuant to acquisitions or strategic transactions, provided any such
issuance shall only be to a person which is, itself or through its subsidiaries,
an operating company in a business synergistic with the business of the Issuer
and in which the Issuer receives benefits in addition to the investment of
funds, but shall not include a transaction in which the Issuer is issuing
securities primarily for the purpose of raising capital or to an entity whose
primary business is investing in securities; (d) shares of Common Stock to be
issued pursuant to obligations existing on the date hereof under the License
Agreements (as defined in the Notes) (existing and as in effect as of the date
hereof) in an amount not to exceed 300,000 shares; and (e) shares of Common
Stock issued upon conversion of the Notes, the Warrants, the Series B Warrants
(as defined in the Purchase Agreement) and the warrants issued to the Finder on
the date hereof as described in the Purchase Agreement.

    

    “Person” means an
individual, corporation, limited liability company, partnership, joint stock
company, trust, unincorporated organization, joint venture, Governmental
Authority or other entity of whatever nature.

    

    “Per Share Market
Value” means on any particular date (a) the last trading price on any
national securities exchange on which the Common Stock is listed, or, if there
is no such price, the closing bid price for a share of Common Stock in the
over-the-counter market, as reported by the OTC Bulletin Board or in the
National Quotation Bureau Incorporated or similar organization or agency
succeeding to its functions of reporting prices) at the close of business on
such date, or (b) if the Common Stock is not then reported by the OTC Bulletin
Board or the National Quotation Bureau Incorporated (or similar organization or
agency succeeding to its functions of reporting prices), then the average of the
“Pink Sheet” quotes for the Common Stock on such date, or (c) if the Common
Stock is not then publicly traded the fair market value of a share of Common
Stock on such date as determined by the Board in good faith; provided, however, that the
Majority Holders, after receipt of the determination by the Board, shall have
the right to select, jointly with the Issuer, an Independent Appraiser, in which
case, the fair market value shall be the determination by such Independent
Appraiser; and provided, further that all
determinations of the Per Share Market Value shall be appropriately adjusted for
any stock dividends, stock splits or other similar transactions during the
period between the date as of which such market value was required to be
determined and the date it is finally determined.  The determination
of fair market value shall be based upon the fair market value of the Issuer
determined on a going concern basis as between a willing buyer and a willing
seller and taking into account all relevant factors determinative of value, and
shall be final and binding on all parties.  In determining the fair
market value of any shares of Common Stock, no consideration shall be given to
any restrictions on transfer of the Common Stock imposed by agreement or by
federal or state securities laws, or to the existence or absence of, or any
limitations on, voting rights.

     

    
 

    
      
         

      

      
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    “Purchase Agreement”
means the Note and Warrant Purchase Agreement dated as of July 16, 2008 among
the Issuer and the investors party thereto.

    

    “Securities” means any
debt or equity securities of the Issuer, whether now or hereafter authorized,
any instrument convertible into or exchangeable for Securities or a Security,
and any option, warrant or other right to purchase or acquire any
Security.  “Security” means one of the Securities.

    

    “Securities Act” means
the Securities Act of 1933, as amended, or any similar federal statute then in
effect.

    

    “Subsidiary” means any
corporation at least 50% of whose outstanding Voting Stock, and a limited
liability company at least 50% of whose membership interests, shall at the time
be owned directly or indirectly by the Issuer or by one or more of its
Subsidiaries.

    

    “Term” has the meaning
specified in Section 1 hereof.

    

    “Trading Day” means
(a) a day on which the Common Stock is traded on the OTC Bulletin Board, or (b)
if the Common Stock is not traded on the OTC Bulletin Board, a day on which the
Common Stock is quoted in the over-the-counter market as reported by the
National Quotation Bureau Incorporated (or any similar organization or agency
succeeding its functions of reporting prices); provided, however, that in the
event that the Common Stock is not listed or quoted as set forth in (a) or (b)
hereof, then Trading Day shall mean any day except Saturday, Sunday and any day
which shall be a legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other government action
to close.

    

    “Voting Stock” means,
as applied to the Capital Stock of any corporation, Capital Stock of any class
or classes (however designated) having ordinary voting power for the election of
a majority of the members of the Board of Directors (or other governing body) of
such corporation, other than Capital Stock having such power only by reason of
the happening of a contingency.

    

    “Warrants” means the
Warrants issued and sold pursuant to the Purchase Agreement, including, without
limitation, this Warrant, and any other warrants of like tenor issued in
substitution or exchange for any thereof pursuant to the provisions of Section
2(c), 2(d) or 2(e) hereof or of any of such other Warrants.

    

    “Warrant
Consideration” has the meaning specified in Section 4(i)(i)
hereof.

     

    
 

    
      
         

      

      
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    “Warrant Price”
initially means U.S. $0.55, as such price may be adjusted from time to time as
shall result from the adjustments specified in this Warrant, including Section 4
hereto.

    

    “Warrant Share Number”
means at any time the aggregate number of shares of Warrant Stock which may at
such time be purchased upon exercise of this Warrant, after giving effect to all
prior adjustments and increases to such number made or required to be made under
the terms hereof.

    

    “Warrant Stock” means
Common Stock issuable upon exercise of any Warrant or Warrants or otherwise
issuable pursuant to any Warrant or Warrants.

    

    10.          Other
Notices.  In case at any time:

    

    
      	
               
      

            	
              (A)

            	
              the
      Issuer shall make any distributions to the holders of Common Stock;
      or

            

    

    

    
      	
               
      

            	
              (B)

            	
              the
      Issuer shall authorize the granting to all holders of its Common Stock of
      rights to subscribe for or purchase any shares of Capital Stock of any
      class or of any Common Stock Equivalents or other rights;
    or

            

    

    

    
      	
               
      

            	
              (C)

            	
              there
      shall be any reclassification of the Capital Stock of the Issuer;
      or

            

    

    

    
      	
               
      

            	
              (D)

            	
              there
      shall be any capital reorganization by the Issuer;
  or

            

    

    

    
      	
               
      

            	
              (E)

            	
              there
      shall be any (i) consolidation or merger involving the Issuer or (ii)
      sale, transfer or other disposition of all or substantially all of the
      Issuer’s property, assets or business (except a merger or other
      reorganization in which the Issuer shall be the surviving corporation and
      its shares of Capital Stock shall continue to be outstanding and unchanged
      and except a consolidation, merger, sale, transfer or other disposition
      involving a wholly-owned Subsidiary);
or

            

    

    

    
      	
               
      

            	
              (F)

            	
              there
      shall be a voluntary or involuntary dissolution, liquidation or winding-up
      of the Issuer or any partial liquidation of the Issuer or distribution to
      holders of Common Stock;

            

    

    

    then, in
each of such cases, the Issuer shall give written notice to the Holder of the
date on which (i) the books of the Issuer shall close or a record shall be taken
for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution,
liquidation or winding-up, as the case may be, shall take place.  Such
notice also shall specify the date as of which the holders of Common Stock of
record shall participate in such dividend, distribution or subscription rights,
or shall be entitled to exchange their certificates for Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be.  Such notice shall be given at
least twenty (20) days prior to the action in question and not less than twenty
(20) days prior to the record date or the date on which the Issuer’s transfer
books are closed in respect thereto.  The Holder shall have the right
to send two (2) representatives selected by it to each meeting, who shall be
permitted to attend, but not vote at, such meeting and any adjournments
thereof.  This Warrant entitles the Holder to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Common Stock.

     

     

    
 

    
      
        
        

      

      
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    11.          Amendment and
Waiver.  Any term, covenant, agreement or condition in this
Warrant may be amended, or compliance therewith may be waived (either generally
or in a particular instance and either retroactively or prospectively), by a
written instrument or written instruments executed by the Issuer and the
Majority Holders; provided, however, that no such
amendment or waiver shall reduce the Warrant Share Number, increase the Warrant
Price, shorten the period during which this Warrant may be exercised or modify
any provision of this Section 11 without the consent of the Holder of this
Warrant.

    

    12.          Governing
Law.  THIS
WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF
LAW.

    

    13.           Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earlier of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified for notice prior to 5:00 p.m., eastern time, on a Trading Day, (ii)
the Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified for
notice later than 5:00 p.m., eastern time, on any date and earlier than 11:59
p.m., eastern time, on such date, (iii) the Trading Day following the date of
mailing, if sent by nationally recognized overnight courier service or (iv)
actual receipt by the party to whom such notice is required to be
given.  The addresses for such communications shall be with respect to
the Holder of this Warrant or of Warrant Stock issued pursuant hereto, addressed
to such Holder at its last known address or facsimile number appearing on the
books of the Issuer maintained for such purposes, or with respect to the Issuer,
addressed to:

     

    Valcent
Products Inc.

    Suite
1010 – 789 West Pender Street

    Vancouver,
British Columbia, Canada

    V6C
1H2

    Attn:
Grant Atkins

    Tel:
(604) 637-3106

    Fax:
(604) 606-7980

    

    with a
copy to:

    

    Burns
Figa & Will P.C.

    6400 S. Fiddlers Green
Circle

    Suite
1000

    Greenwood
Village, CO 80111

    Attn: Theresa M.
Mehringer

    Tel:
(303) 796-2626

    Fax:
(303) 796-2777

    

    Copies of
notices to the Holder shall be sent to Burak Anderson & Melloni, PLC, 30
Main Street, Burlington, Vermont 05402, Attention: Shane W. McCormack, Tel No.:
(802) 862-0500, Fax No.: (802) 862-8176.  Any party hereto may from
time to time change its address for notices by giving at least ten (10) days
written notice of such changed address to the other party hereto.

     

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    
 

    14.          Warrant
Agent.  The Issuer may, by written notice to each Holder of
this Warrant, appoint an agent having an office in New York, New York for the
purpose of issuing shares of Warrant Stock on the exercise of this Warrant
pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant
to subsection (d) of Section 2 hereof or replacing this Warrant pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent.

    

    15.          Remedies.  The
Issuer stipulates that the remedies at law of the Holder of this Warrant in the
event of any default or threatened default by the Issuer in the performance of
or compliance with any of the terms of this Warrant are not and will not be
adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.

    

    16.          Successors and
Assigns.  This Warrant and the rights evidenced hereby shall
inure to the benefit of and be binding upon the successors and assigns of the
Issuer, the Holder hereof and (to the extent provided herein) the Holders of
Warrant Stock issued pursuant hereto, and shall be enforceable by any such
Holder or Holder of Warrant Stock.

    

    17.          Modification and
Severability.  If, in any action before any court or agency
legally empowered to enforce any provision contained herein, any provision
hereof is found to be unenforceable, then such provision shall be deemed
modified to the extent necessary to make it
enforceable by such court or agency.  If any such provision is not
enforceable as set forth in the preceding sentence, the unenforceability of such
provision shall not affect the other provisions of this Warrant, but this
Warrant shall be construed as if such unenforceable provision had never been
contained herein.

    

    18.          Headings.  The
headings of the Sections of this Warrant are for convenience of reference only
and shall not, for any purpose, be deemed a part of this Warrant.

     

    
 

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

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

     

    
      
        	 	VALCENT PRODUCTS,
      INC.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ 	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 	 

      

    

     

     

     

     

     

     

     

    
 

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    WARRANT

    EXERCISE
FORM

    

    VALCENT
PRODUCTS INC.

    

    

    The
undersigned _______________, pursuant to the provisions of the within Warrant,
hereby elects to purchase _____ shares of Common Stock of Valcent Products Inc.
covered by the within Warrant.

    
    

     

    
      	Dated:
      _________________     	Signature                      ___________________________
	 	 
	 	Address                      
       ___________________________
	 	                                       ___________________________

    

     

    Number of
shares of Common Stock beneficially owned or deemed beneficially owned by the
Holder on the date of Exercise: _________________________

    

    The
undersigned is an “accredited investor” as defined in Regulation D under the
Securities Act of 1933, as amended.

     

    
      The
undersigned intends that payment of the Warrant Price shall be made as (check
one):

    

     

    Cash
Exercise_______

     

    Cashless
Exercise_______

     

    If the
Holder has elected a Cash Exercise, the Holder shall pay the sum of $________ by
certified or official bank check (or via wire transfer) to the Issuer in
accordance with the terms of the Warrant.

     

    If the
Holder has elected a Cashless Exercise, a certificate shall be issued to the
Holder for the number of shares equal to the whole number portion of the product
of the calculation set forth below, which is ___________.

     

    X = Y -
(A)(Y)

      B

    

    
      Where:

    

    

    
      The
number of shares of Common Stock to be issued to the Holder
__________________(“X”).

    

    

    The
number of shares of Common Stock purchasable upon exercise of all of the Warrant
or, if only a portion of the Warrant is being exercised, the portion of the
Warrant being exercised ___________________________ (“Y”).

    

    
      The
Warrant Price ______________ (“A”).

    

    

    The Per
Share Market Value of one share of Common
Stock  _______________________ (“B”).

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    

    

    ASSIGNMENT

    

    FOR VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.

     

    
      	Dated:
      _________________     	Signature                      ___________________________
	 	 
	 	Address                      
       ___________________________
	 	                                       ___________________________

    

    PARTIAL
ASSIGNMENT

    

    FOR VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named
corporation.

     

    
      	Dated:
      _________________     	Signature                      ___________________________
	 	 
	 	Address                      
       ___________________________
	 	                                       ___________________________

    FOR USE
BY THE ISSUER ONLY:

    

    This
Warrant No. W-___ canceled (or transferred or exchanged) this _____ day of
___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-_____ issued for ____ shares of Common Stock in
the name of _______________.

    

    

    

    
 

     

     

    
      24exhibit_4-3.htm

    
      

    

    Exhibit
4.3

    
 

    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 VALCENT PRODUCTS INC. SHALL HAVE RECEIVED AN OPINION OF
COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER
THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

    

    UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS WARRANT AND THE
SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE MUST NOT TRADE THE SECURITY BEFORE
NOVEMBER 17, 2008.

    

    WARRANT
TO PURCHASE

    

    SHARES OF
COMMON STOCK

    

    OF

    

    VALCENT
PRODUCTS INC.

    

    

    Expires
July 16, 2013

    

    
       

      
        	No.: W-B-2	
                 Number of
      Shares:  ___________

              

      

      Date of
Issuance: July 16, 2008

    

    

    

    FOR VALUE
RECEIVED, subject to the provisions hereinafter set forth, the undersigned,
Valcent Products Inc., a corporation organized under the laws of the Province of
Alberta, Canada (together with its successors and assigns, the “Issuer”), hereby
certifies that _______________, or its registered assigns is entitled to
subscribe for and purchase, during the period specified in this Warrant, up to
______________ 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
9 hereof.

    

    1.           Term.  The
right to subscribe for and purchase shares of Warrant Stock represented hereby
shall commence on July 16, 2008 and shall expire at 5:00 p.m., eastern time, on
July 16, 2013 (such period being the “Term”).

    

    2.           Method of Exercise Payment;
Issuance of New Warrant; Transfer and Exchange.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

     

    (a)          Time of
Exercise.  The purchase rights represented by this Warrant may
be exercised in whole or in part at any time and from time to time during the
Term commencing on July 16, 2008.

    

    (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 at such Holder’s election (i) by certified or official bank
check or by wire transfer to an account designated by the Issuer, (ii) by
“cashless exercise” in accordance with the provisions of subsection (c) of this
Section 2, or (iii) by a combination of the foregoing methods of payment
selected by the Holder of this Warrant.

    

    (c)          Cashless
Exercise.  Notwithstanding any provisions herein to the
contrary and commencing 180 days following the Original Issue Date, if the Per
Share Market Value of one share of Common Stock is greater than the Warrant
Price (at the date of calculation as set forth below), in lieu of exercising
this Warrant by payment of cash, the Holder may exercise this Warrant by a
cashless exercise and shall receive the number of shares of Common Stock equal
to an amount (as determined below) by surrender of this Warrant at the principal
office of the Issuer together with the properly endorsed Notice of Exercise in
which event the Issuer shall issue to the Holder a number of shares of Common
Stock computed using the following formula:

    

    X = Y - (A)(Y)

                     B

    

    
      	
              Where

            	
              X
      =

            	
              the
      number of shares of Common Stock to be issued to the
    Holder.

            

    

    

    
      	
               
      

            	
              Y
      =

            	
              the
      number of shares of Common Stock purchasable upon exercise of all of the
      Warrant or, if only a portion of the Warrant is being exercised, the
      portion of the Warrant being
exercised.

            

    

    

    
      	
               
      

            	
              A
      =

            	
              the
      Warrant Price.

            

    

    

    B
=           the Per Share
Market Value of one share of Common Stock.

    

    (d)          Issuance of Stock
Certificates.  In the event of any exercise of the rights
represented by this Warrant in accordance with and subject to the terms and
conditions hereof, (i) 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 three (3) Trading Days after such
exercise (the “Delivery Date”) or,
if the Issuer’s securities are eligible for such manner of delivery, then at the
request of the Holder, issued and delivered to the Depository Trust Company
(“DTC”) account
on the Holder’s behalf via the Deposit Withdrawal Agent Commission System
(“DWAC”) within
a reasonable time, not exceeding three (3) Trading Days after such exercise, and
the Holder hereof shall be deemed for all purposes to be the Holder of the
shares of Warrant Stock so purchased as of the date of such exercise and (ii)
unless this Warrant has expired, a new Warrant representing the number of shares
of Warrant Stock, if any, with respect to which this Warrant shall not then have
been exercised (less any amount thereof which shall have been canceled in
payment or partial payment of the Warrant Price as hereinabove provided) shall
also be issued to the Holder hereof at the Issuer’s expense within such
time.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    

    (e)          Transferability of
Warrant.  Subject to Section 2(g), this Warrant may be
transferred by a Holder 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 the Holder’s duly
authorized attorney, upon surrender of this Warrant at the principal office of
the Issuer, 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 for the purchase
of 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 VALCENT PRODUCTS INC. SHALL HAVE RECEIVED AN OPINION OF
COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER
THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    

    (iii)          The
restrictions imposed by this subsection (g) upon the transfer of this Warrant or
the shares of Warrant Stock to be purchased upon exercise hereof shall terminate
(A) when such securities shall have been resold pursuant to an effective
registration statement under the Securities Act, (B) upon the Issuer’s receipt
of an opinion of counsel, in form and substance reasonably satisfactory to the
Issuer, addressed to the Issuer to the effect that such restrictions are no
longer required to ensure compliance with the Securities Act and state
securities laws or (C) upon the Issuer’s receipt of other evidence reasonably
satisfactory to the Issuer that such registration and qualification under the
Securities Act and state securities laws are not required.  Whenever
such restrictions shall cease and terminate as to any such securities, the
Holder thereof shall be entitled to receive from the Issuer (or its transfer
agent and registrar), without expense (other than applicable transfer taxes, if
any), new Warrants (or, in the case of shares of Warrant Stock, new stock
certificates) of like tenor not bearing the applicable legend required by
paragraph (ii) above relating to the Securities Act and state securities
laws.

    

    (h)          Buy In.

    

    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.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    

    (i)           Redemption.  On
the Redemption Date (as defined below), the Issuer may cause this Warrant to be
redeemed in whole, but not in part, at a price equal to $0.01 multiplied by the
number of shares of Warrant Stock underlying this Warrant by providing ten (10)
Trading Days’ prior written notice of such redemption; provided, that, it is
understood and agreed that during such ten Trading Day period, the Holder may
exercise its rights to exercise this Warrant in whole or in part; and provided,
further, that no redemption shall hereunder occur unless (i) the Equity
Conditions with respect to all shares of Warrant Stock are satisfied (or waived
in writing by the Holder) on the Redemption Date, and (ii) the Holder would
otherwise be permitted to exercise this Warrant in full under Section 8
hereof.  Upon the receipt of a notice that the Warrant is being
redeemed the Holder may exercise this Warrant pursuant to the cashless exercise
provisions provided in Section 2(c) of this Warrant.  As used herein,
a “Redemption Date” shall be a date selected by the Issuer following the
satisfaction of the Equity Conditions on which the Per Share Market Value has
exceeded $1.50 for of a period of twenty (20) consecutive Trading Days;
provided, that, the Equity Conditions have been satisfied with respect to all
shares of Warrant Stock underlying this Warrant, without lapse or restriction of
any kind, for such twenty (20) consecutive Trading Day period.

    

    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, upon issuance, be duly authorized, validly
issued, fully paid and non-assessable and free from all taxes, liens and charges
created by or through 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 the issue upon
exercise of this Warrant a number of shares of Common Stock equal to at least
120% of the aggregate number of shares of Common Stock exercisable hereunder to
provide for the exercise of this Warrant (without regard to limitations on
exercisability set forth in Section 8).

    

    (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, and, to the extent permissible under the
applicable securities exchange’s 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.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    

    (c)          Covenants.  The
Issuer shall not by any action including, without limitation, amending the
Certificate 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
Certificate 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.

    

    (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 Warrant Share Number.  The number of shares of Common Stock
for which this Warrant is exercisable, and the price at which such shares may be
purchased upon exercise of this Warrant, 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 Section 5.  Notwithstanding any
adjustment hereunder, at no time shall the Warrant Price be greater than $0.55
per share, except if it is adjusted pursuant to Section 4(b)(iii).

    

    (a)          Recapitalization,
Reorganization, Reclassification, Consolidation, Merger or
Sale.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (i)              
In case the Issuer after the Original Issue Date shall do any of the following
(each, a “Triggering
Event”): (a) consolidate with or merge 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 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 in effect at the time
immediately prior to 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 (without giving effect to
the limitations on exercise set forth in Section 8 hereof) immediately prior
thereto (including the right to elect the type of consideration, if applicable),
subject to adjustments (subsequent to such corporate action) as nearly
equivalent as possible to the adjustments provided for elsewhere in this Section
4.  Unless the surviving entity in any such Triggering Event is a
public company under the Securities Exchange Act of 1934, the common equity
securities of which are traded or quoted on a national securities exchange or
the OTC Bulletin Board (a “Qualifying Entity”),
the Holder, at its option, shall be permitted to require that the Issuer pay to
the Holder an amount equal to the Black-Scholes value of this
Warrant.

    

    (ii)              
Notwithstanding anything contained in this Warrant to the contrary and so long
as the surviving entity is a Qualifying Entity, the Issuer will not be deemed to
have effected  any Triggering Event if, prior to the consummation
thereof, 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 the Holder of this
Warrant and reasonably satisfactory to the Holder, (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 shares of
Securities, cash or property as, in accordance with the foregoing provisions of
this subsection (a), such Holder shall be entitled to receive, and such Person
shall have similarly delivered to such Holder, an opinion of counsel for such
Person, which shall be reasonably satisfactory to the Holder, 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 such Person may be
required to deliver upon any exercise of this Warrant or the exercise of any
rights pursuant hereto.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (b)          Stock Dividends,
Subdivisions and Combinations.  If at any time the Issuer
shall:

    

    (i)              
set a record date or take a record of the holders of its 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 (without giving effect to the limitations on exercise
set forth in Section 8 hereof), 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 (without giving effect to the limitations on
exercise set forth in Section 8 hereof) divided by (B) the number of shares of
Common Stock for which this Warrant is exercisable immediately after such
adjustment (without giving effect to the limitations on exercise set forth in
Section 8 hereof).

    

    (c)          Certain Other
Distributions.  If at any time the Issuer shall set a record
date or take a record of the holders of its 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, Additional Shares of Common Stock or Permitted Issuances),
or

     

     

    
 

    
      
        
        

      

      
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    (iii)            
any warrants or other rights to subscribe for or purchase 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,
Additional Shares of Common Stock or Permitted Issuances), then (1)
the number of shares of Common Stock for which this Warrant is exercisable shall
be adjusted to equal the product of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such adjustment (without
giving effect to the limitations on exercise
set forth in Section 8 hereof) multiplied by a fraction (A) the numerator of
which shall be the Per Share Market Value of Common Stock at the date of taking
such record and (B) the denominator of which shall be such Per Share Market
Value minus the amount allocable to one share of Common Stock of any such cash
so distributable and of the fair value (as determined in good faith by the Board
of Directors of the Issuer and supported by an opinion from an investment
banking firm reasonably acceptable to the Holder) of any and all such evidences
of indebtedness, shares of stock, other securities or property or warrants or
other subscription or purchase rights so distributable, 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 (without giving effect to the
limitations on exercise set forth in Section 8 hereof) divided by (B) the number
of shares of Common Stock for which this Warrant is exercisable immediately
after such adjustment (without giving effect to the limitations on exercise set
forth in Section 8 hereof).  A reclassification of the Common Stock
(other than a change in par value, or from par value to no par value or from no
par value to par value) into shares of Common Stock and shares of any other
class of stock shall be deemed a distribution by the Issuer to the holders of
its Common Stock of such shares of such other class of stock within the meaning
of this Section 4(c) and, if the outstanding shares of Common Stock shall be
changed into a larger or smaller number of shares of Common Stock as a part of
such reclassification, such change shall be deemed a subdivision or combination,
as the case may be, of the outstanding shares of Common Stock within the meaning
of Section 4(b).

    

    (d)          Issuance of Additional
Shares of Common Stock.

     

    (i)              
 In the event the Issuer shall at any time following the Original Issue
Date issue any Additional Shares of Common Stock (otherwise than as provided in
the foregoing subsections (a) through (c) of this Section 4), at a price per
share less than the Warrant Price then in effect or without consideration, then
the Warrant Price upon each such issuance shall be adjusted to the price equal
to the consideration per share paid for such Additional Shares of Common
Stock.

    

    (ii)             
No adjustment of the Warrant Price shall be made under paragraph (i) of
Section 4(d) upon the issuance of any Additional Shares of Common Stock
which are issued pursuant to the exercise or conversion of any Common Stock
Equivalents if any such adjustment shall previously have been made upon the
issuance of such Common Stock Equivalents, or upon the issuance of any warrant
or other rights therefor pursuant to Sections 4(e) or 4(f), or in connection
with any Permitted Issuances.

    

    (e)          Issuance of Warrants or
Other Rights.  If at any time the Issuer shall take a record of
the Holders of its Common Stock for the purpose of entitling them to receive a
distribution of, or shall in any manner (whether directly or by assumption in a
merger in which the Issuer is the surviving corporation) issue or sell any
warrants or options, whether or not immediately exercisable, and the Warrant
Consideration (hereafter defined) per share for which Common Stock is issuable
upon the exercise of such warrant or option shall be less than the Warrant Price
in effect immediately prior to the time of such issue or sale, then the Warrant
Price then in effect immediately prior to the time of such issue or sale, shall
be adjusted to the price equal to the Warrant Consideration per share for which
Common Stock is issuable upon the exercise of such warrant or
option.    No adjustments of the Warrant Price then in
effect shall be made upon the actual issue of such Common Stock or of such
Common Stock Equivalents upon exercise of such warrants or other rights or upon
the actual issue of such Common Stock upon such conversion or exchange of such
Common Stock Equivalents if adjustment has been previously made pursuant to this
section.  No adjustments of the Warrant Price shall be made under this
Section 4(e) in connection with any Permitted Issuances.

    
      
         

      

      
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    (f)           Issuance of Common Stock
Equivalents.  If at any time prior the Issuer shall take a
record of the Holders of its Common Stock for the purpose of entitling them to
receive a distribution of, or shall in any manner (whether directly or by
assumption in a merger in which the Issuer is the surviving corporation) issue
or sell, any Common Stock Equivalents, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the Common Stock Equivalent
Consideration (hereafter defined) per share for which Common Stock is issuable
upon such conversion or exchange shall be less than the Warrant Price in effect
immediately prior to the time of such issue or sale, or if, after any such
issuance of Common Stock Equivalents, the price per share for which Additional
Shares of Common Stock may be issuable thereafter is amended or adjusted, and
such price as so amended shall be less than the applicable Conversion Price in
effect at the time of such amendment or adjustment, then the Warrant Price then
in effect immediately prior to the time of such issue or sale, shall upon each
such issuance or sale be adjusted to the price equal to the Common Stock
Equivalent Consideration per share paid for such Common Share
Equivalents.  No further adjustment of the Warrant Price then in
effect shall be made under this Section 4(f) upon the issuance of any Common
Stock Equivalents which are issued pursuant to the exercise of any warrants or
other subscription or purchase rights therefor, if any such adjustment shall
previously have been made upon the issuance of such warrants or other rights
pursuant to Section 4(e).  No further adjustments of the Warrant Price
then in effect shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Common Stock Equivalents if adjustment shall have
previously been made pursuant to this section.  No adjustments of the
Warrant Price shall be made under this Section 4(f) in connection with any
Permitted Issuances.

    

    (g)          Superseding
Adjustment.  If, at any time after any adjustment of the
Warrant Price then in effect shall have been made pursuant to Section 4(e) or
Section 4(f) as the result of any issuance of warrants, other rights or Common
Stock Equivalents, and (i) such warrants or other rights, or the right of
conversion or exchange in such other Common Stock Equivalents, shall expire, and
all or a portion of such warrants or other rights, or the right of conversion or
exchange with respect to all or a portion of such other Common Stock
Equivalents, as the case may be shall not have been exercised, or (ii) the
consideration per share for which shares of Common Stock are issuable pursuant
to such Common Stock Equivalents, shall be increased solely by virtue of
provisions therein contained for an automatic increase in such consideration per
share upon the occurrence of a specified date or event, then for each
outstanding Warrant such previous adjustment shall be rescinded and annulled and
the Additional Shares of Common Stock which were deemed to have been issued by
virtue of the computation made in connection with the adjustment so rescinded
and annulled shall no longer be deemed to have been issued by virtue of such
computation.  Upon the occurrence of an event set forth in this
Section 4(g) above, there shall be a recomputation made of the effect of
such Common Stock Equivalents on the basis of: (i) treating the number of
Additional Shares of Common Stock or other property, if any, theretofore
actually issued or issuable pursuant to the previous exercise of any such
warrants or other rights or any such right of conversion or exchange, as having
been issued on the date or dates of any such exercise and for the consideration
actually received and receivable therefor, and (ii) treating any such
Common Stock Equivalents which then remain outstanding as having been granted or
issued immediately after the time of such increase of the consideration per
share for which shares of Common Stock or other property are issuable under such
Common Stock Equivalents; whereupon a new adjustment of the Warrant Price then
in effect shall be made, which new adjustment shall supersede the previous
adjustment so rescinded and annulled.

    
      
         

      

      
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    (h)           Purchase of Common Stock by
the Issuer; Below Market Issuances.  If the Issuer at any time
while this Warrant is outstanding shall, directly or indirectly through a
Subsidiary or otherwise, purchase, redeem or otherwise acquire any shares of
Common Stock at a price per share greater than the Per Share Market Value, then
the Warrant Price upon each such purchase, redemption or acquisition shall be
adjusted to that price determined by multiplying such Warrant Price by a
fraction (i) the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such purchase, redemption or acquisition
minus the number of shares of Common Stock which the aggregate consideration for
the total number of such shares of Common Stock so purchased, redeemed or
acquired would purchase at the Per Share Market Value; and (ii) the denominator
of which shall be the number of shares of Common Stock outstanding immediately
after such purchase, redemption or acquisition.  For the purposes of
this subsection (h), the date as of which the Per Share Market Price shall be
computed shall be the earlier of (x) the date on which the Issuer shall enter
into a firm contract for the purchase, redemption or acquisition of such Common
Stock, or (y) the date of actual purchase, redemption or acquisition of such
Common Stock.  For the purposes of this subsection (h), a purchase,
redemption or acquisition of a Common Stock Equivalent shall be deemed to be a
purchase of the underlying Common Stock, and the computation herein required
shall be made on the basis of the full exercise, conversion or exchange of such
Common Stock Equivalent on the date as of which such computation is required
hereby to be made, whether or not such Common Stock Equivalent is actually
exercisable, convertible or exchangeable on such date.  If the Issuer
shall issue Common Stock or rights, options or warrants entitling the recipient
or holder thereof to subscribe for or purchase shares of Common Stock at a price
per share less than the Per Share Market Value on the date of issuance, but
higher than the Warrant Price then in effect, the Warrant Price shall be
multiplied by a fraction, of which the denominator shall be the number of shares
of the Common Stock outstanding on the date of issuance of such Common Stock or
rights or warrants plus the number of additional shares of Common Stock offered
for subscription or purchase, and of which the numerator shall be the number of
shares of the Common Stock outstanding on the date of issuance of such rights or
warrants plus the number of shares which the aggregate offering price of the
total number of shares so offered (assuming receipt by the Issuer in full of all
consideration payable upon exercise of such rights, options or warrants) would
purchase at such Per Share Market Value.  Such adjustment shall be
made whenever such securities are issued, and shall become effective immediately
after the record date (if applicable) for the determination of stockholders
entitled to receive such rights, options or warrants.

     

     

    
      
         

      

      
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    (i)           Other Provisions applicable
to Adjustments under this Section.  The following provisions
shall be applicable to the making of adjustments of the number of shares of
Common Stock for which this Warrant is exercisable and the Warrant Price then in
effect provided for in this Section 4:

    

    (i)               
Computation of
Consideration.  To the extent that any Additional Shares of
Common Stock or any Common Stock Equivalents (or any warrants or other rights
therefor) shall be issued for cash consideration, the consideration received by
the Issuer therefor shall be the amount of the cash received by the Issuer
therefor, or, if such Additional Shares of Common Stock or Common Stock
Equivalents are offered by the Issuer for subscription, the subscription price,
or, if such Additional Shares of Common Stock or Common Stock Equivalents are
sold to underwriters or dealers for public offering without a subscription
offering, the initial public offering price (in any such case subtracting any
amounts paid or receivable for accrued interest or accrued dividends and without
taking into account any compensation, discounts or expenses paid or incurred by
the Issuer for and in the underwriting of, or otherwise in connection with, the
issuance thereof).  To the extent that such issuance shall be for a
consideration other than cash, then, except as herein otherwise expressly
provided, the amount of such consideration shall be deemed to be the fair value
of such consideration at the time of such issuance as mutually de­termined
in good faith by the Board of Directors of the Issuer and the Majority
Holders.  The consideration for any Additional Shares of Common Stock
issuable pursuant to any warrants or other rights to subscribe for or purchase
the same shall be the consideration received by the Issuer for issuing such
warrants or other rights divided by the number of shares of Common Stock
issuable upon the exercise of such warrant or right plus the additional
con­sideration payable to the Issuer upon exercise of such warrant or other
right for one share of Common Stock (together the “Warrant
Consideration”).  The consideration for any Additional Shares of
Common Stock issuable pursuant to the terms of any Common Stock Equivalents
shall be the consideration received by the Issuer for issuing such Common Stock
Equivalent, divided by the number of shares of Common Stock issuable upon the
conversion or other exercise of such Common Stock Equivalent, plus the
additional consideration, if any, payable to the Issuer upon the exercise of the
right of conversion or exchange in such Common Stock Equivalent for one share of
Common Stock (together the “Common Stock Equivalent
Consideration”).  In case of the issuance at any time of any
Additional Shares of Common Stock or Common Stock Equivalents in payment or
satisfaction of any dividends upon any class of stock other than Common Stock,
the Issuer shall be deemed to have received for such Additional Shares of Common
Stock or Common Stock Equivalents a consideration equal to the amount of such
dividend so paid or satisfied.

    

    (ii)             
Adjustments of Number
of Shares.  In connection with an adjustment of the Warrant
Price pursuant to Sections (d), (e), (f), (g) and (h) of this
Section 4, the number of shares of Common Stock issuable hereunder shall be
increased such that the aggregate Warrant Price payable hereunder, after taking
into account the decrease in the Exercise Price, shall be equal to the aggregate
Warrant Price prior to such adjustment.

    
      
         

      

      
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    (iii)            
Fractional
Interests.  In computing adjustments under this Section 4,
fractional interests in Common Stock shall be taken into account to the nearest
one one-hundredth (1/100th) of a
share.

    

    (iv)            
When Adjustment Not
Required.  If the Issuer shall take a record of the holders of
its Common Stock for the purpose of entitling them to receive a dividend or
distribution or subscription or purchase rights and shall, thereafter and before
the distribution to stockholders thereof, legally abandon its plan to pay or
deliver such dividend, distribution, subscription or purchase rights, then
thereafter no adjustment shall be required by reason of the taking of such
record and any such adjustment previously made in respect thereof shall be
rescinded and annulled.

    

    (j)           Form of Warrant after
Adjustments.  The form of this Warrant need not be changed
because of any adjustments in the Warrant Price or the number and kind of
securities purchasable upon exercise of this Warrant.

    

    (k)       
  Escrow of
Property.  If after any property becomes distributable pursuant
to this Section 4 by reason of the taking of any record of the holders of Common
Stock, but prior to the occurrence of the event for which such record is taken,
and the Holder exercises this Warrant, such property shall be held in escrow for
the Holder by the Issuer to be distributed to the Holder upon and to the extent
that the event actually takes place, upon payment of the then current Warrant
Price.  Notwithstanding any other provision to the contrary herein, if
the event for which such record was taken fails to occur or is rescinded, then
such escrowed property shall be returned to the Issuer.

    

    5.           Notice of
Adjustments.  Whenever the Warrant Price or Warrant Share
Number shall be adjusted pursuant to Section 4 hereof (for purposes of this
Section 5, each an “adjustment”), the Issuer shall cause its Chief
Financial Officer to prepare and execute a certificate setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated (including a
description of the basis on which the Board made any determination hereunder),
and the Warrant Price and Warrant Share Number after giving effect to such
adjustment, and shall cause copies of such certificate to be delivered to the
Holder of this Warrant promptly after each adjustment.  Any dispute
between the Issuer and the Holder of this Warrant with respect to the matters
set forth in such certificate may at the option of the Holder of this Warrant be
submitted to one of the national accounting firms currently known as the “big
four” selected by the Holder, provided that the
Issuer shall have ten (10) days after receipt of notice from such Holder of its
selection of such firm to object thereto, in which case such Holder shall select
another such firm and the Issuer shall have no such right of
objection.  The firm selected by the Holder of this Warrant as
provided in the preceding sentence shall be instructed to deliver a written
opinion as to such matters to the Issuer and such Holder within thirty (30) days
after submission to it of such dispute.  Such opinion shall be final
and binding on the parties hereto.

     

    
      
         

      

      
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    6.           Fractional
Shares.  No fractional shares of Warrant Stock will be issued
in connection with any exercise hereof, but in lieu of such fractional shares,
the Issuer shall at its option either (a) make a cash payment therefor equal in
amount to the product of the applicable fraction multiplied by the Per Share
Market Value then in effect or (b) issue one whole share in lieu of such
fractional share.

    

    7.           [Intentionally
Reserved].

    

    8.         
 Certain Exercise
Restrictions.

     

    (a)          Notwithstanding
anything to the contrary set forth in this Warrant, at no time may a holder of
this Warrant exercise this Warrant if the number of shares of Common Stock to be
issued pursuant to such exercise would exceed, when aggregated with all other
shares of Common Stock owned by such holder at such time, the number of shares
of Common Stock which would result in such holder beneficially owning (as
determined in accordance with Section 13(d) of the Securities Exchange Act
of 1934, as amended, and the rules thereunder) in excess of 9.99% of all of the
Common Stock outstanding at such time; provided, however, that upon a holder of
this Warrant providing the Issuer with sixty-one (61) days notice (pursuant to
Section 13 hereof) (the “Waiver Notice”) that such holder would like to
waive this Section 8 with regard to any or all shares of Common Stock
issuable upon exercise of this Warrant, this Section 8 will be of no force
or effect with regard to all or a portion of the Warrant referenced in the
Waiver Notice; provided, further, that this Section 8(a) shall be of no further
force or effect during the sixty-one (61) days immediately preceding the
expiration of the term of this Warrant.

    

    9.           Definitions.  For
the purposes of this Warrant, the following terms have the following
meanings:

    

    “Additional Shares of Common
Stock” means all shares of Common Stock issued by the Issuer after the
Original Issue Date, and all shares of Other Common, if any, issued by the
Issuer after the Original Issue Date, except for Permitted
Issuances.

    

    “Board” shall mean the
Board of Directors of the Issuer.

    

    “Capital Stock” means
and includes (i) any and all shares, interests, participations or other
equivalents of or interests in (however designated) corporate stock, including,
without limitation, shares of preferred or preference stock, (ii) all
partnership interests (whether general or limited) in any Person which is a
partnership, (iii) all membership interests or limited liability company
interests in any limited liability company, and (iv) all equity or ownership
interests in any Person of any other type.

    

    “Certificate of
Incorporation” means the Amended and Restated Certificate of
Incorporation of the Issuer as in effect on the Original Issue Date, and as
hereafter from time to time amended, modified, supplemented or restated in
accordance with the terms hereof and thereof and pursuant to applicable
law.

    
      
         

      

      
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    “Common Stock” means
the Common Stock, no par value per share, of the Issuer and any other Capital
Stock into which such stock may hereafter be changed.

    

    “Common Stock
Equivalent” means any Convertible Security or warrant, option or other
right to subscribe for or purchase any Additional Shares of Common Stock or any
Convertible Security.

    

    “Common Stock Equivalent
Consideration” has the meaning specified in Section 4 (i) (i)
hereof.

    

    “Convertible
Securities” means evidences of Indebtedness, shares of Capital Stock or
other Securities which are or may be at any time convertible into or
exchangeable for Additional Shares of Common Stock.  The term
“Convertible Security” means one of the Convertible Securities.

    

    “Equity Conditions”
shall mean, during the period in question, (i) the Issuer shall have duly
honored all exercises of this Warrant by the Holder, if any, (ii) all liquidated
damages and other amounts owing to the Holder in respect of this Warrant and the
other Transaction Documents (as defined in the Purchase Agreement) shall have
been paid; (iii) (A) there is an effective registration statement pursuant to
which the Holder is permitted to utilize the prospectus thereunder to resell all
of the shares issuable pursuant to this Warrant (and the Issuer believes, in
good faith, through its ability to exercise this Warrant by way of a cashless
exercise as set forth in Section 2(c) hereof, that such effectiveness will
continue uninterrupted for the foreseeable future), or (B) the Holder is able to
resell in one transaction all of the shares issuable pursuant to this Warrant,
pursuant to Rule 144(and the Issuer believes, in good faith, that the
availability of Rule 144 for such sales will continue uninterrupted for the
foreseeable future), (iv) the Common Stock is trading on the Trading Market (as
defined in the Notes) and all of the shares issuable pursuant to this Warrant
are listed for trading on a Trading Market (and the Issuer believes, in good
faith, that trading of the Common Stock on a Trading Market will continue
uninterrupted for the foreseeable future), (v) there is a sufficient number of
authorized but unissued and otherwise unreserved shares of Common Stock for the
issuance of all of the shares issuable pursuant to the Transaction Documents,
(vi) there is then existing no default or event of default or event which, with
the passage of time or the giving of notice, would constitute a default or an
event of default under the Transaction Documents, and (vii) no public
announcement of a pending or proposed Major Transaction or Triggering Event has
occurred (each as defined in the Notes).

    

    “Governmental
Authority” means any governmental, regulatory or self-regulatory entity,
department, body, official, authority, commission, board, agency or
instrumentality, whether federal, state or local, and whether domestic or
foreign.

    
      
         

      

      
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    “Holders” mean the
Persons who shall from time to time own any Warrant.  The term
“Holder” means one of the Holders.

    

    “Independent
Appraiser” means a nationally recognized or major regional investment
banking firm or firm of independent certified public accountants of recognized
standing (which may be the firm that regularly examines the financial statements
of the Issuer) that is regularly engaged in the business of appraising the
Capital Stock or assets of corporations or other entities as going concerns, and
which is not affiliated with either the Issuer or the Holder of any
Warrant.

    

    “Issuer” means Valcent
Products Inc., a corporation organized under the laws of the Province of
Alberta, Canada, and its successors.

    

    “Majority Holders”
means at any time the Holders of Warrants, substantially in the form of this
Warrant and issued on the Original Issue Date, exercisable for a majority of the
shares of Warrant Stock issuable under the Warrants at the time
outstanding.

    

    “Note” or “Notes” shall have the
meaning set forth in the Purchase Agreement.

    

    “Original Issue Date”
means July 16, 2008.

    

    “OTC Bulletin Board”
means the over-the-counter electronic bulletin board.

    

    “Other Common” means
any other Capital Stock of the Issuer of any class which shall be authorized at
any time after the date of this Warrant (other than Common Stock) and which
shall have the right to participate in the distribution of earnings and assets
of the Issuer without limitation as to amount.

    

    “Permitted Issuances”
means (a) issuances of options to employees, officers or directors of the Issuer
pursuant to any compensatory stock option plan existing on the date hereof (and
not amended to increase the shares available thereunder) if such grants were
duly approved by a majority of the non-employee members of the Board of
Directors of the Issuer or a majority of the members of a committee of
non-employee directors established for such purpose and such options have an
exercise price in excess of the Closing Bid Price (as defined in the Notes) on
the date of grant; (b) issuances of securities upon the exercise or exchange of
or conversion of any securities issued hereunder and/or securities exercisable
or exchangeable for or convertible into shares of Common Stock issued and
outstanding on the Original Issue Date, provided that such securities have not
been amended since the Original Issue Date to increase the number of such
securities or to decrease the exercise, exchange or conversion price of any such
securities; (c) securities issued pursuant to acquisitions or strategic
transactions, provided any such issuance shall only be to a person which is,
itself or through its subsidiaries, an operating company in a business
synergistic with the business of the Issuer and in which the Issuer receives
benefits in addition to the investment of funds, but shall not include a
transaction in which the Issuer is issuing securities primarily for the purpose
of raising capital or to an entity whose primary business is investing in
securities; (d) shares of Common Stock to be issued pursuant to obligations
existing on the date hereof under the License Agreements (as defined in the
Notes) (existing and as in effect as of the date hereof) in an amount not to
exceed 300,000 shares; and (e) shares of Common Stock issued upon conversion of
the Notes, the Warrants, the Series A Warrants (as defined in the Purchase
Agreement) and the warrants issued to the Finder on the date hereof as described
in the Purchase Agreement.

     

    
      
         

      

      
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    “Person” means an
individual, corporation, limited liability company, partnership, joint stock
company, trust, unincorporated organization, joint venture, Governmental
Authority or other entity of whatever nature.

    

    “Per Share Market
Value” means on any particular date (a) the last trading price on any
national securities exchange on which the Common Stock is listed, or, if there
is no such price, the closing bid price for a share of Common Stock in the
over-the-counter market, as reported by the OTC Bulletin Board or in the
National Quotation Bureau Incorporated or similar organization or agency
succeeding to its functions of reporting prices) at the close of business on
such date, or (b) if the Common Stock is not then reported by the OTC Bulletin
Board or the National Quotation Bureau Incorporated (or similar organization or
agency succeeding to its functions of reporting prices), then the average of the
“Pink Sheet” quotes for the Common Stock on such date, or (c) if the Common
Stock is not then publicly traded the fair market value of a share of Common
Stock on such date as determined by the Board in good faith; provided, however, that the
Majority Holders, after receipt of the determination by the Board, shall have
the right to select, jointly with the Issuer, an Independent Appraiser, in which
case, the fair market value shall be the determination by such Independent
Appraiser; and provided, further that all
determinations of the Per Share Market Value shall be appropriately adjusted for
any stock dividends, stock splits or other similar transactions during the
period between the date as of which such market value was required to be
determined and the date it is finally determined.  The determination
of fair market value shall be based upon the fair market value of the Issuer
determined on a going concern basis as between a willing buyer and a willing
seller and taking into account all relevant factors determinative of value, and
shall be final and binding on all parties.  In determining the fair
market value of any shares of Common Stock, no consideration shall be given to
any restrictions on transfer of the Common Stock imposed by agreement or by
federal or state securities laws, or to the existence or absence of, or any
limitations on, voting rights.

    

    “Purchase Agreement”
means the Note and Warrant Purchase Agreement dated as of July 16, 2008 among
the Issuer and the investors party thereto.

    

    “Securities” means any
debt or equity securities of the Issuer, whether now or hereafter authorized,
any instrument convertible into or exchangeable for Securities or a Security,
and any option, warrant or other right to purchase or acquire any
Security.  “Security” means one of the Securities.

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    “Securities Act” means
the Securities Act of 1933, as amended, or any similar federal statute then in
effect.

    

    “Subsidiary” means any
corporation at least 50% of whose outstanding Voting Stock, and a limited
liability company at least 50% of whose membership interests, shall at the time
be owned directly or indirectly by the Issuer or by one or more of its
Subsidiaries.

    

    “Term” has the meaning
specified in Section 1 hereof.

    

    “Trading Day” means
(a) a day on which the Common Stock is traded on the OTC Bulletin Board, or (b)
if the Common Stock is not traded on the OTC Bulletin Board, a day on which the
Common Stock is quoted in the over-the-counter market as reported by the
National Quotation Bureau Incorporated (or any similar organization or agency
succeeding its functions of reporting prices); provided, however, that in the
event that the Common Stock is not listed or quoted as set forth in (a) or (b)
hereof, then Trading Day shall mean any day except Saturday, Sunday and any day
which shall be a legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other government action
to close.

    

    “Voting Stock” means,
as applied to the Capital Stock of any corporation, Capital Stock of any class
or classes (however designated) having ordinary voting power for the election of
a majority of the members of the Board of Directors (or other governing body) of
such corporation, other than Capital Stock having such power only by reason of
the happening of a contingency.

    

    “Warrants” means the
Warrants issued and sold pursuant to the Purchase Agreement, including, without
limitation, this Warrant, and any other warrants of like tenor issued in
substitution or exchange for any thereof pursuant to the provisions of Section
2(c), 2(d) or 2(e) hereof or of any of such other Warrants.

    

    “Warrant
Consideration” has the meaning specified in Section 4(i)(i)
hereof.

    

    “Warrant Price”
initially means U.S. $0.75, as such price may be adjusted from time to time as
shall result from the adjustments specified in this Warrant, including Section 4
hereto.

    

    “Warrant Share Number”
means at any time the aggregate number of shares of Warrant Stock which may at
such time be purchased upon exercise of this Warrant, after giving effect to all
prior adjustments and increases to such number made or required to be made under
the terms hereof.

    

    “Warrant Stock” means
Common Stock issuable upon exercise of any Warrant or Warrants or otherwise
issuable pursuant to any Warrant or Warrants.

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    10.          Other
Notices.  In case at any time:

    

    
      	
               
      

            	
              (A)

            	
              the
      Issuer shall make any distributions to the holders of Common Stock;
      or

            

    

    

    
      	
               
      

            	
              (B)

            	
              the
      Issuer shall authorize the granting to all holders of its Common Stock of
      rights to subscribe for or purchase any shares of Capital Stock of any
      class or of any Common Stock Equivalents or other rights;
    or

            

    

    

    
      	
               
      

            	
              (C)

            	
              there
      shall be any reclassification of the Capital Stock of the Issuer;
      or

            

    

    

    
      	
               
      

            	
              (D)

            	
              there
      shall be any capital reorganization by the Issuer;
  or

            

    

    

    
      	
               
      

            	
              (E)

            	
              there
      shall be any (i) consolidation or merger involving the Issuer or (ii)
      sale, transfer or other disposition of all or substantially all of the
      Issuer’s property, assets or business (except a merger or other
      reorganization in which the Issuer shall be the surviving corporation and
      its shares of Capital Stock shall continue to be outstanding and unchanged
      and except a consolidation, merger, sale, transfer or other disposition
      involving a wholly-owned Subsidiary);
or

            

    

    

    
      	
               
      

            	
              (F)

            	
              there
      shall be a voluntary or involuntary dissolution, liquidation or winding-up
      of the Issuer or any partial liquidation of the Issuer or distribution to
      holders of Common Stock;

            

    

    

    then, in
each of such cases, the Issuer shall give written notice to the Holder of the
date on which (i) the books of the Issuer shall close or a record shall be taken
for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take
place.  Such notice also shall specify the date as of which the
holders of Common Stock of record shall participate in such dividend,
distribution or subscription rights, or shall be entitled to exchange their
certificates for Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be.  Such
notice shall be given at least twenty (20) days prior to the action in question
and not less than twenty (20) days prior to the record date or the date on which
the Issuer’s transfer books are closed in respect thereto.  The Holder
shall have the right to send two (2) representatives selected by it to each
meeting, who shall be permitted to attend, but not vote at, such meeting and any
adjournments thereof.  This Warrant entitles the Holder to receive
copies of all financial and other information distributed or required to be
distributed to the holders of the Common Stock.

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    11.          Amendment and
Waiver.  Any term, covenant, agreement or condition in this
Warrant may be amended, or compliance therewith may be waived (either generally
or in a particular instance and either retroactively or prospectively), by a
written instrument or written instruments executed by the Issuer and the
Majority Holders; provided, however, that no such
amendment or waiver shall reduce the Warrant Share Number, increase the Warrant
Price, shorten the period during which this Warrant may be exercised or modify
any provision of this Section 11 without the consent of the Holder of this
Warrant.

    

    12.          Governing
Law.  THIS
WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF
LAW.

    

    13.          Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earlier of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified for notice prior to 5:00 p.m., eastern time, on a Trading Day, (ii)
the Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified for
notice later than 5:00 p.m., eastern time, on any date and earlier than 11:59
p.m., eastern time, on such date, (iii) the Trading Day following the date of
mailing, if sent by nationally recognized overnight courier service or (iv)
actual receipt by the party to whom such notice is required to be
given.  The addresses for such communications shall be with respect to
the Holder of this Warrant or of Warrant Stock issued pursuant hereto, addressed
to such Holder at its last known address or facsimile number appearing on the
books of the Issuer maintained for such purposes, or with respect to the Issuer,
addressed to:

    

    Valcent Products Inc.

    Suite
1010 – 789 West Pender Street

    Vancouver,
British Columbia, Canada

    V6C
1H2

    Attn:
Grant Atkins

    Tel:
(604) 637-3106

    Fax:
(604) 606-7980

    

    with a
copy to:

    

    Burns
Figa & Will P.C.

    6400 S. Fiddlers Green
Circle

    Suite
1000

    Greenwood
Village, CO 80111

    Attn: Theresa M.
Mehringer

    Tel:
(303) 796-2626

    Fax:
(303) 796-2777

    

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    Copies of
notices to the Holder shall be sent to Burak Anderson & Melloni, PLC, 30
Main Street, Burlington, Vermont 05402, Attention: Shane W. McCormack, Tel No.:
(802) 862-0500, Fax No.: (802) 862-8176.  Any party hereto may from
time to time change its address for notices by giving at least ten (10) days
written notice of such changed address to the other party hereto.

    

    14.          Warrant
Agent.  The Issuer may, by written notice to each Holder of
this Warrant, appoint an agent having an office in New York, New York for the
purpose of issuing shares of Warrant Stock on the exercise of this Warrant
pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant
to subsection (d) of Section 2 hereof or replacing this Warrant pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent.

    

    15.          Remedies.  The
Issuer stipulates that the remedies at law of the Holder of this Warrant in the
event of any default or threatened default by the Issuer in the performance of
or compliance with any of the terms of this Warrant are not and will not be
adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.

    

    16.          Successors and
Assigns.  This Warrant and the rights evidenced hereby shall
inure to the benefit of and be binding upon the successors and assigns of the
Issuer, the Holder hereof and (to the extent provided herein) the Holders of
Warrant Stock issued pursuant hereto, and shall be enforceable by any such
Holder or Holder of Warrant Stock.

    

    17.          Modification and
Severability.  If, in any action before any court or agency
legally empowered to enforce any provision contained herein, any provision
hereof is found to be unenforceable, then such provision shall be deemed
modified to the extent necessary to make it enforceable by such court or
agency.  If any such provision is not enforceable as set forth in the
preceding sentence, the unenforceability of such provision shall not affect the
other provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.

    

    18.          Headings.  The
headings of the Sections of this Warrant are for convenience of reference only
and shall not, for any purpose, be deemed a part of this Warrant.

    

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

     

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

     

     

    
      
        	 	VALCENT PRODUCTS
      INC.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ 	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 

      

     

     

     

     

     

     

     

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    WARRANT

    EXERCISE
FORM

    

    VALCENT
PRODUCTS INC.

    

    

    The
undersigned _______________, pursuant to the provisions of the within Warrant,
hereby elects to purchase _____ shares of Common Stock of Valcent Products Inc.
covered by the within Warrant.

     

    
      	Dated:
      _________________           	Signature                    ____________________________
	 	 
	 	Address                      ____________________________
	 	                                     ____________________________

    

     

    Number of
shares of Common Stock beneficially owned or deemed beneficially owned by the
Holder on the date of Exercise: _________________________

    

    The
undersigned is an “accredited investor” as defined in Regulation D under the
Securities Act of 1933, as amended.

     

    
      The
undersigned intends that payment of the Warrant Price shall be made as (check
one):

    

     

    Cash
Exercise_______

     

    Cashless
Exercise_______

     

    If the
Holder has elected a Cash Exercise, the Holder shall pay the sum of $________ by
certified or official bank check (or via wire transfer) to the Issuer in
accordance with the terms of the Warrant.

     

    If the
Holder has elected a Cashless Exercise, a certificate shall be issued to the
Holder for the number of shares equal to the whole number portion of the product
of the calculation set forth below, which is ___________.

     

    X = Y -
(A)(Y)

      B

    

    
      Where:

    

    

    
       The
number of shares of Common Stock to be issued to the Holder
__________________(“X”).

    

    

    The
number of shares of Common Stock purchasable upon exercise of all of the Warrant
or, if only a portion of the Warrant is being exercised, the portion of the
Warrant being exercised ___________________________ (“Y”).

    

    
      The
Warrant Price ______________ (“A”).

    

    

    The Per
Share Market Value of one share of Common
Stock  _______________________ (“B”).

    

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    ASSIGNMENT

    

    FOR VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.

     

    
      	Dated:
      _________________           	Signature                    ____________________________
	 	 
	 	Address                      ____________________________
	 	                                     ____________________________

    

     

    

    PARTIAL
ASSIGNMENT

    

    FOR VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named
corporation.

    

    
      	Dated:
      _________________           	Signature                    ____________________________
	 	 
	 	Address                      ____________________________
	 	                                     ____________________________

     

     

    FOR USE
BY THE ISSUER ONLY:

    

    This
Warrant No. W-B__ canceled (or transferred or exchanged) this _____ day of
___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-B_____ issued for ____ shares of Common Stock in
the name of _______________.

    

    

    

    
 

     

     

    
      24

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