AEROGROW INTERNATIONAL, INC. SUBSCRIPTION AGREEMENT INSTRUCTIONS IMPORTANT: PLEASE READ CAREFULLY BEFORE SIGNING. SIGNIFICANT REPRESENTATIONS ARE CONTAINED IN THIS DOCUMENT. DELIVER THE EXECUTED AGREEMENTS, NASD QUESTIONNAIRE, AND CUSTOMER ACCOUNT...
EXHIBIT
10.16
INSTRUCTIONS
IMPORTANT:
PLEASE READ CAREFULLY BEFORE SIGNING.
SIGNIFICANT
REPRESENTATIONS ARE CONTAINED IN THIS DOCUMENT.
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1.
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Individual
Investors
must complete the requested information on pages 12 and 13 and sign
the
signature page on Page 13.
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2.
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Entity
Investors
must complete the requested information on pages 14 and 15 and if
applicable, page 16 and sign the signature page on page 15 and if
applicable, page 16.
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3.
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Every
Investor
must complete the NASD questionnaire found on pages 17 through 20,
and
sign the signature page on page 21.
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4.
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Every
Investor
must complete Xxxxxxx Securities, LLC Customer Account Application,
attached hereto, if the Investor does not have a current Customer
Account
Application on file with Xxxxxxx Securities,
LLC.
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DELIVER
THE EXECUTED AGREEMENTS, NASD QUESTIONNAIRE, AND CUSTOMER ACCOUNT APPLICATION
TO:
Xxxxxxx
Securities, LLC
0000
XXX Xxxxxxx, Xxxxx 0000
Xxxxxxxxx
Xxxxxxx, XX 00000
Attention:
Xxxx Xxxxxxx
ALONG
WITH PAYMENT FOR THE UNITS SUBSCRIBED FOR
If
you
are tendering a check, make it payable to “AeroGrow International, Inc.
Segregated Account.” If you are paying by wire transfer, please contact Xxxx
Xxxxxxx of Xxxxxxx Securities, LLC for instructions at (000) 000-0000.
If
you
have any questions regarding this form, please contact Xxxx Xxxxxxx of Xxxxxxx
Securities, LLC at (000) 000-0000.
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AEROGROW
INTERNATIONAL, INC. (“Company”) and the Investor hereby agree as
follows:
1. Subscription
for Securities.
I
(sometimes referred to herein as the “Investor”) hereby subscribe for and agree
to purchase the number of units (“Units”), consisting of a 10% unsecured
convertible promissory note in the principal amount of $10,000 due June 30,
2006
(“Note”) and 2,000 five-year warrants, each warrant providing for the purchase
of one share of the Company’s common stock at the exercise price equal to the
lesser of: (i) $5.01 per share, or (ii) if a registered public offering of
securities by the Company is declared effective under the Securities Act of
1933, as amended (“Securities Act”) prior to the payment or conversion of the
Note (“Registered Offering”), 100% of the per share offering price of the
Company’s common stock in the first such Registered Offering (“Public Offering
Price”) (“Warrants”), set forth on the signature page hereto upon the terms and
conditions described in this Agreement. The price per Unit is
$10,000.
There
will be a minimum subscription amount of 3 Units per Investor, or $30,000,
unless the Company and the Placement Agent waive such minimum amount; provided,
in no case shall fractional Units be offered or sold.
The
Units
are being offered in a private placement in accordance with the terms set forth
in the Confidential Private Placement Memorandum dated June 6, 2005. Capitalized
terms not defined herein will have the same meaning as set forth in the
Memorandum. The Units will have the terms and conditions described herein and
in
the Memorandum and the Warrants will have the terms and conditions as set forth
in the Common Stock Purchase Warrant. Xxxxxxx Securities, LLC. (“Xxxxxxx
Securities”) is acting as managing placement agent for the
offering.
2. Offering
Period.
The
Units will be offered for sale commencing on the date of the Memorandum and
continuing until July 21, 2005, unless extended by the Company and Xxxxxxx
Securities without notice to investors to a date not later than August 15,
2005
(the "Termination Date"); provided, however, that the Offering Period shall
in
all events terminate upon the sale of all of the Units.
3. Investor
Delivery of Documents and Payment.
I
hereby tender (i) to Xxxxxx Xxxxxx Xxxxx Xxxx, Xxxxxx, Xxxxxxxx, for deposit
into the Company’s Segregated Account, the full purchase price of the Units I am
purchasing by check or wire, and (ii) to Xxxxxxx Securities, one manually
executed copy of this Subscription Agreement with the appropriate questionnaires
therein completed, the completed NASD questionnaire attached to this
Subscription Agreement and the Customer Account Application (if I have not
previously provided one to the Placement Agent). If I am using a check, it
will
be made payable to “AeroGrow International, Inc. Segregated Account” maintained
by the Company at Xxxxxx Street State Bank. If I am paying by wire transfer,
I
will contact Xxxx Xxxxxxx of Xxxxxxx Securities for instructions at (000)
000-0000. Prior to the earlier of a Closing (as defined in Section 5 hereof)
or
the Termination Date, my check or wire transfer will be held in the Segregated
Account maintained by the Company at Xxxxxx Street State Bank, which shall
be a
non-interest bearing segregated bank account subject to the terms and conditions
herein. If the Company does not receive and accept my subscription by the
Termination Date, my payment will be returned to me without interest or
deduction.
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4. Acceptance
or Rejection of Subscription.
The
Company and Xxxxxxx Securities have the right to reject this subscription for
the Units, in whole or in part for any reason and at any time prior to the
Closing, notwithstanding prior receipt by me of notice of acceptance of my
subscription. In the event my subscription is rejected, my payment will be
returned promptly to me without interest or deduction and this Subscription
Agreement will have no force or effect. The Units subscribed for herein will
not
be deemed issued to or owned by me until one copy of this Subscription Agreement
has been executed by me and countersigned by the Company and the Closing with
respect to my subscription has occurred.
5. Closing
and Delivery of Securities.
The
offering is being made on a “best efforts, no minimum, $3,000,000 maximum”
basis. There
is
no minimum number of Units that must be sold prior to the closing of this
offering. Accordingly, this offering may be closed at any time and in one or
more closings for any subscriptions that are received and accepted by the
Company, without the need for the Company to have sold any minimum number of
Units. The
initial closing (“Initial Closing”) may occur at any time, as determined jointly
by the Company and Xxxxxxx Securities. Subsequent closings with respect to
the
sale of additional Units may take place at any time with respect to
subscriptions accepted by the Termination Date (each such closing, together
with
the Initial Closing, being referred to as the “Closing”). In the event my
subscription is accepted and there is a Closing, my payment will be released
to
the Company and the certificates representing the Notes and the Warrants to
which I am subscribing for will be delivered promptly to me along with a fully
executed version of this Agreement.
6. Conditions
to Closing.
The
Closing of this offering is conditioned on the Company effecting a 1-for-5
reverse split of the Company’s outstanding Common Stock prior to the Initial
Closing (“Reverse Split”). All securities in this offering are adjusted for and
take into account the Reverse Split.
7. Offering
to Accredited Investors.
This
offering is limited to accredited investors as defined in Section 2(15) of
the
Securities Act of 1933, as amended (“Securities Act”), and Rule 501 promulgated
thereunder, and is being made without registration under the Securities Act
in
reliance upon the exemptions contained in Sections 3(b), 4(2) and/or 4(6) of
the
Securities Act, and Rule 506 of Regulation D, promulgated as part of the rules
and regulations under the Securities Act, and applicable state securities laws.
As indicated by the responses on the signature page hereof, the Investor is
an
accredited investor within the meaning of Section 2(15) of the Securities Act
and Rule 501 promulgated thereunder.
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8.1. Filing
of Registration Statement.
The
Company will file, on one occasion only, a registration statement under the
Securities Act filed with the Securities and Exchange Commission (“Commission”)
to register for re-offer and re-sale, the Common Stock into which the Notes
may
be converted, the Common Stock underlying the Warrants included in the Units
and
the Common Stock underlying the warrants received upon conversion of the Notes
(collectively, “Registrable Securities”) on behalf of the Investors (or
subsequent holders, referred to together as the “Holders”).
The
registration statement will be filed within sixty (60) days after the final
Closing of this offering and the Company will use its commercially reasonable
efforts to have the registration statement declared effective within one hundred
fifty (150) days after the final Closing. Each Holder will provide upon request,
such information as the Company may require for inclusion in the registration
statement. All costs associated with the registration of the Registrable
Securities, other than brokerage commissions incurred by the Holders in
connection with resales of the Registrable Securities, shall be borne by the
Company. The Registrable Securities and the Common Stock underlying the warrants
to be issued to Placement Agents under this offering will be included on the
registration statement. If the Registration Statement is not declared effective
within 150 days of the Closing Date, for any reason, other than adverse market
conditions as determined by the Placement Agent in its sole discretion,
investors holding Notes with a principal amount of not less than $2,000,000
in
the aggregate may demand, on a one-time basis, the registration of the
Registrable Securities and any Penalty Shares on a registration statement
covering only the foregoing securities, unless the demanding Holders first
consent in writing to the
continuation of efforts to achieve effectiveness of the Registration Statement
if previously filed by the Company. Upon
effectiveness of any new or continued registration statement, the Company shall
promptly file a Form 8-A to register its common stock under section 12(g) of
the
Exchange Act of 1934, as amended (“Exchange Act”) to the extent that such shares
of Common Stock are not already registered. As long as the Notes remain
outstanding, the Company shall provide to each purchaser: (i) quarterly
financial statements prepared in accordance with GAAP within 45 days after
the
end of each quarter, and (ii) annual audited financial statements prepared
in
accordance with 90 days after the end of each fiscal year end, unless such
financial statements are included in periodic reports under the Exchange Act,
which are timely filed.
8.2. Effective
and Current.
The
Company will use its reasonable commercial efforts to keep the registration
statement which registers the Registrable Securities pursuant hereto effective
and the related prospectus current until the earlier of the date by which all
of
the Registrable Securities has been sold or the date that the Registrable
Securities may be sold pursuant to Rule 144(k) promulgated under the Securities
Act as provided in Section 8.5 hereof.
8.3. Amended
Prospectus.
The
Company will notify each Holder of such Registrable Securities as expeditiously
as possible following the effectiveness of the registration statement on which
the Registrable Securities are registered, and/or of any request by the
Securities and Exchange Commission (“Commission”) for the amending or
supplementing of such registration statement or prospectus. If the prospectus
is
amended to comply with the requirements of the Securities Act, the Holders,
if
requested by the Company, will immediately cease making offers of the
Registrable Securities and return all prospectuses to the Company, and the
Company will promptly provide the Holders with revised prospectuses to enable
the Holders to resume making offers of the Registrable Securities. The Company
will promptly notify the Holders, if after delivery of a prospectus to the
Holders, that, in the judgment of the Company, it is advisable to suspend use
of
the prospectus delivered to the Holders due to pending material developments
or
other events that have not yet been publicly disclosed and as to which the
Company believes public disclosure would be detrimental to the Company. Upon
receipt of such notice, each such Holder will immediately discontinue any sales
of Registrable Securities pursuant to such registration statement until such
Holder has received copies of a supplemented or amended prospectus or until
such
Holder is advised in writing by the Company that the then current prospectus
may
be used and has received copies of any additional or supplemental filings that
are incorporated or deemed incorporated by reference in such prospectus.
Notwithstanding anything to the contrary herein, the Company will not exercise
its rights under this subsection to suspend sales of Registrable Securities
for
a period in excess of 60 days in any 365-day period.
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8.4. Indemnification.
(a) The
Company will indemnify the Holders of the Registrable Securities to be sold
pursuant to any registration statement hereunder, the officers and directors
of
each Holder, each underwriter of such Registrable Securities and each person,
if
any, who controls such Holders or underwriters within the meaning of Section
15
of the Securities Act or Section 20(a) of the Exchange Act, or any state
securities law or regulation, against all loss, claim, damage, expense or
liability (including all reasonable attorneys’ fees and other expenses
reasonably incurred in investigating, preparing or defending against any claim
whatsoever incurred by the indemnified party in any action or proceeding between
(A) the indemnified party and any third party or otherwise or (B) the indemnitor
and the indemnified party only with respect to an action or proceeding to
enforce the indemnification provisions of this Section 8.4(a) to which any
of
them may become subject under the Securities Act, the Exchange Act or any other
statute or at common law or otherwise under the laws of any of the United States
or foreign countries, arising from such registration statement or based upon
any
untrue statement or alleged untrue statement of a material fact contained in
(x)
any preliminary prospectus, the registration statement or prospectus (as from
time to time each may be amended and supplemented); (y) any post-effective
amendment or amendments or any new registration statement and prospectus in
which is included the Registrable Securities; or (z) any application or other
document or written communication (collectively called “application”) executed
by the Company or based upon written information furnished by the Company in
any
jurisdiction in order to qualify the Registrable Securities under the securities
laws thereof or filed with the Commission, any state securities commission
or
agency or any securities exchange; or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, unless such statement or omission is made in reliance upon,
and
in conformity with, written information furnished to the Company by and with
respect to such registered holders (“Purchaser Information”) expressly for use
in any preliminary prospectus, the registration statement or prospectus, or
any
amendment or supplement thereof, or in any application, as the case may be,
or
unless the indemnities failed to deliver a final prospectus in which the
material misstatement or omission was corrected. Subject to the foregoing
provisions of this paragraph, the Company will reimburse such Holder,
underwriter and each such controlling person for any legal or any other expenses
reasonably incurred by such Holder, underwriter or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action. The Company agrees promptly to notify such Holders of
the
commencement of any litigation or proceedings against the Company or any of
its
officers, directors or controlling persons in connection with the issue and
sale
or resale of the Registrable Securities or in connection with the registration
statement or prospectus.
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(b) The
Holders agree to indemnify and hold harmless the Company, the officers and
directors of the Company and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20(a) of
the
Exchange Act against all loss, claim, damage, expense or liability to which
the
Company or such controlling person may become subject, under the Securities
Act
or otherwise insofar as such losses, claims, damages, expenses or liabilities
(or actions in respect thereof) arise out of or are based upon Purchaser
Information that is included or relied upon by the Company in the registration
statement or prospectus or any amendment or supplement thereto or in any
application; and will reimburse the Company, officer, director and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action, provided that such loss, claim, damage, expense or
liability is found ultimately to arise out of or be based upon such Purchaser
Information.
(c) Any
party
entitled to indemnification hereunder (“Indemnified Party”) will permit the
Company to assume the defense of any such claim or any litigation resulting
therefrom; provided, that counsel for the Company, who will conduct the defense
of such claim or litigation, will be approved by the Indemnified Party (whose
approval shall not be unreasonably withheld). The Indemnified Party may
participate in such defense at such party’s expense; provided, however, that the
Company will pay such expense if representation of such Indemnified Party by
the
counsel retained by the Company would be inappropriate due to actual or
potential differing interests between the Indemnified Party and any other party
represented by such counsel in such proceeding; provided further that in no
event will the Company be required to pay the expenses of more than one law
firm
per jurisdiction as counsel for the Indemnified Party. The Company is also
responsible for the expenses of such defense if the Company does not elect
to
assume such defense. The Company, in the defense of any such claim or litigation
may not, except with the consent of each Indemnified Party, consent to entry
of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim
or
litigation, and no Indemnified Party may consent to entry of any judgment or
settle such claim or litigation without the prior written consent of the
Company, which consent may not be unreasonably withheld.
8.5. Periodic
Reporting.
The
Company agrees that during the period commencing on the effectiveness of any
registration statement with respect to the Company’s securities and continuing
until the Holder can sell his Registrable Securities without restriction under
Rule 144(k) promulgated under the Securities Act and all restrictive legends
under the Securities Act are removed from the certificates representing such
securities and any stop transfer order for such certificates is removed, it
will
timely file all reports due pursuant to the Exchange Act and it will not
terminate its obligation to file periodic reports under the Exchange Act or
Securities Act.
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8.6. Expiration
of Registration Rights.
Notwithstanding anything to the contrary contained herein, such registration
is
not required to be continued for any Holder of Registrable Securities if in
the
opinion of counsel to the Company, the Holder can sell his Registrable
Securities without restriction under Rule 144(k) promulgated under the
Securities Act and all restrictive legends under the Securities Act are removed
from the certificates representing such securities and any stop transfer order
for such certificates is removed.
8.7. Successors.
The
registration rights granted to the Holders inure to the benefit of all the
Holder’s successors, heirs, pledges, assignees, transferees and purchasers of
the Notes, Warrants or underlying Common Stock, subject to the limitations
imposed by interpretations of the SEC regarding selling security holder
registration statements.
8.8. Penalties.
The
Company and Holder agree that Holder will suffer damages if the Company fails
to
fulfill certain of its filing date and other obligations pursuant to Sections
8.1 and 8.5 hereof and that it would not be possible to ascertain the extent
of
such damages with precision. Accordingly, the Company hereby agrees to pay
liquidated damages (“Liquidated Damages”) to the Holder under the following
circumstances: (a) if the Registration Statement is not filed by the Company
on
or prior to 60 days after the final Closing in the offering (such an event,
a
“Filing Default”); (b) if the Registration Statement is not declared effective
by the SEC on or prior to 150 days after the final Closing in the offering
(such
an event, an “Effectiveness Default”); or (c) if, pursuant to the Company’s
obligations under Section 8.5 hereof, the Company does not file its required
periodic reports under the Exchange Act when due (such an event, a “Reporting
Default” and together with a Filing Default and an Effectiveness Default, a “SEC
Default”). In the event of an SEC Default, the Company shall as Liquidated
Damages pay to Holder, for each 30-day period of an SEC Default, an amount
equal
to 1% of the aggregate purchase price paid for the Units purchased in the
offering pursuant to this Agreement up to a maximum aggregate of 24 months
of
SEC Defaults. The Company shall pay the Liquidated Damages in shares of Common
Stock, priced at $2.00 per share as follows: (i) in connection with a Filing
Default, on the 61st day after the Initial Closing, and each 30th day thereafter
until the Registration Statement is filed with the SEC; (ii) in connection
with an Effectiveness Default, on the 151st
day
after the Initial Closing, and each 30th day thereafter until the Registration
Statement is declared effective by the SEC; or (iii) in connection with a
Reporting Default, on the 31st
consecutive day of after a Reporting Default has occurred, provided that if
the
Reporting Default has been cured, then such days during which a Reporting
Default were accruing will be added to any future Reporting Default period
for
the purposes of calculating the payment of the liquidated damages provided
for
in this provision. Notwithstanding the foregoing, there shall be no penalty
for
a delay in filing or effectiveness caused by adverse market conditions as
determined by the Placement Agent in it sole discretion.
8.9. Lock-up
Provisions.
Notwithstanding the Registration Rights or an effective Registration Statement
for the Conversion Shares and Underlying Common Stock, each Investor will be
contractually prohibited from selling or transferring any Conversion Shares
or
Underlying Common Stock until the 180th day following the closing of the
Registered Offering, unless the underwriter agrees to an earlier
date.
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9.1. Investor
Representations.
I am
aware that, except for any rescission rights that may be provided under
applicable laws, I am not entitled to cancel, terminate or revoke this
subscription, and any agreements made in connection herewith will survive my
death or disability. In order to induce the Company to issue and sell the Units
to me, I represent and warrant that the information relating to me stated herein
is true and complete as of the date hereof and will be true and complete as
of
the date on which my purchase of Units becomes effective. If, prior to the
final
consummation of the offer and sale of the Units, there should be any change
in
such information or any of the information becomes incorrect or incomplete,
I
agree to notify the Company and supply the Company promptly with corrective
information.
(a) I
have
read the Memorandum relating to this offering and all exhibits listed therein
and fully understand the Memorandum, including the “Risk Factors” contained
therein. I have been given access to full and complete information regarding
the
Company and have utilized such access to my satisfaction for the purpose of
verifying the information included in the Memorandum and exhibits thereto,
and I
have either met with or been given reasonable opportunity to meet with officers
of the Company for the purpose of asking reasonable questions of such officers
concerning the terms and conditions of the offering of the Units and the
business and operations of the Company, and all such questions have been
answered to my full satisfaction. I also have been given an opportunity to
obtain any additional relevant information to the extent reasonably available
to
the Company. I have received all information and materials regarding the Company
that I have reasonably requested. After my reading of the materials about the
Company, I understand that there is no assurance as to the future performance
of
the Company.
(b) I
have
received no representation or warranty from the Company or Xxxxxxx Securities
or
any of their respective officers, directors, employees or agents in respect
of
my investment in the Company. I am not participating in the offering as a result
of or subsequent to: (i) any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or broadcast
over television, radio or the Internet, or (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising.
9.3. Speculative
Investment.
I am
aware that the Units are a speculative investment that involves a high degree
of
risk including, but not limited to, the risk of losses from operations of the
Company and the total loss of my investment. I have such knowledge and
experience in financial and business matters as to be capable of evaluating
the
merits and risks of an investment in the Units and have obtained, in my
judgment, sufficient information from the Company to evaluate the merits and
risks of an investment in the Company. I have not utilized any person as my
purchaser representative (as defined in Regulation D) in connection with
evaluating such merits and risks and have relied solely upon my own
investigation in making a decision to invest in the Company. I have been urged
to seek independent advice from my professional advisors relating to the
suitability of an investment in the Company in view of my overall financial
needs and with respect to the legal and tax implications of such investment.
I
believe that the investment in the Units is suitable for me based upon my
investment objectives and financial needs, and I have adequate means for
providing for my current financial needs and contingencies and have no need
for
liquidity with respect to my investment in the Company. The investment in the
Company does not constitute all or substantially all of my investment
portfolio.
-8-
9.4. Restrictions
on Transfer.
I
understand that (i) none of the Registrable Securities have been registered
under the Securities Act or the securities laws of certain states in reliance
on
specific exemptions from registration, (ii) no securities administrator of
any
state or the federal government has recommended or endorsed this offering or
made any finding or determination relating to the fairness of an investment
in
the Company, and (iii) the Company is relying on my representations and
agreements for the purpose of determining whether this transaction meets the
requirements of the exemptions afforded by the Securities Act and certain state
securities laws. Other than as set forth herein, I acknowledge that there is
no
assurance that the Company will file any registration statement for the
securities I am purchasing, that such registration statement, if filed, will
be
declared effective or, if declared effective, that the Company will be able
to
keep it effective until I sell the securities registered thereon. Furthermore,
I
agree to furnish the Company with such information regarding myself and the
distribution of the securities proposed by me as the Company may request in
connection with any registration, qualification or compliance with the Company’s
registration obligations set forth herein.
9.5. Investment
Representation.
I am
purchasing the Units for my own account for investment and not with a view
to,
or for sale in connection with, any subsequent distribution of the securities,
nor with any present intention of selling or otherwise disposing of all or
any
part of the Registrable Securities. I
understand that, although there is a public market for the Registrable
Securities, there is no assurance that such market will continue and there
is no
market at present for the Warrants and it is unlikely that a market will ever
develop for the Warrants in the future. I understand and agree that the
Registrable Securities cannot be resold, pledged, assigned or otherwise disposed
of unless they are subsequently registered under the Securities Act and under
applicable securities laws of certain states, or an exemption from such
registration is available.
I
understand that, except as set forth herein, the Company is under no obligation
to register the securities or to assist me in complying with any exemption
from
such registration under the Securities Act or any state securities laws. I
hereby authorize the Company to place a legend denoting the restrictions on
the
certificates representing the securities.
9.6. Entity
Authority.
If the
Investor is a corporation, partnership, company, trust, employee benefit plan,
individual retirement account, Xxxxx Plan or other tax-exempt entity, it is
authorized and qualified to become an investor in the Company and the person
signing this Subscription Agreement on behalf of such entity has been duly
authorized by such entity to do so.
9.7. No
Offer Until Determination of Suitability.
I
acknowledge that any delivery to me of the documents relating to the offering
of
the Units prior to the determination by the Company of my suitability will
not
constitute an offer of the Units until such determination of suitability is
made.
9.8. For
Florida Residents.
None of
the Units, Notes or underlying Common Stock and Warrants have been registered
under the Florida Securities Act, by reason of specific exemptions thereunder
relating to the limited availability of the offering. Pursuant to Section
517.061(11) of the Florida Securities Act, when sales are made to five (5)
or
more persons in Florida, any sale made pursuant to Subsection 517.061(11) of
the
Florida Securities Act will be voidable by such Florida purchaser either within
three days after the first tender of consideration is made by the purchaser
to
the issuer or an agent of the issuer, or within three days after the
availability of the privilege is communicated to such purchaser, whichever
occurs later. In addition, as required by Section 517.061(11)(a)(3), Florida
Statutes and by Rule 3-500.05(a) thereunder, if I am a Florida resident I may
have, at the offices of the Company, at any reasonable hour, after reasonable
notice, access to the materials set forth in the Rule that the Company can
obtain without unreasonable effort or expense.
-9-
10. Indemnification.
I
hereby agree to indemnify and hold harmless the Company and Xxxxxxx Securities,
their respective officers, directors, stockholders, employees, agents and
attorneys against any and all losses, claims, demands, liabilities, and expenses
(including reasonable legal or other expenses incurred by each such person
in
connection with defending or investigating any such claims or liabilities,
whether or not resulting in any liability to such person or whether incurred
by
the indemnified party in any action or proceeding between the indemnitor and
indemnified party or between the indemnified party and any third party) to
which
any such indemnified party may become subject, insofar as such losses, claims,
demands, liabilities and expenses (a) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact made by me and
contained herein or (b) arise out of or are based upon any breach by me of
any
representation, warranty or agreement made by me contained herein. Xxxxxxx
Securities is a third-party beneficiary of this Section and this Section may
not
be modified or amended without the prior written agreement of Xxxxxxx
Securities.
11. Severability;
Remedies.
In the
event any parts of this Subscription Agreement are found to be void, the
remaining provisions of this Subscription Agreement are nevertheless binding
with the same effect as though the void parts were deleted.
12. Governing
Law and Jurisdiction.
This
Subscription Agreement will be deemed to have been made and delivered in
Colorado and will be governed as to validity, interpretation, construction,
effect and in all other respects by the internal laws of the State of Colorado.
Each of the Company and the Investor hereby (i) agrees that any legal suit,
action or proceeding arising out of or relating to this Subscription Agreement
will be instituted exclusively in the District Court, City and County of Denver,
or in the United States District Court for the District of Colorado, (ii) waives
any objection to the venue of any such suit, action or proceeding and the right
to assert that such forum is not a convenient forum for such suit, action or
proceeding, (iii) irrevocably consents to the jurisdiction of the District
Court, City and County of Denver, and the United States District Court for
the
District of Colorado in any such suit, action or proceeding, (iv) agrees to
accept and acknowledge service of any and all process that may be served in
any
such suit, action or proceeding in the District Court, City and County of Denver
or in the United States District Court for the District of Colorado and (v)
agrees that service of process upon it mailed by certified mail to its address
set forth on my signature page will be deemed in every respect effective service
of process upon it in any suit, action or proceeding.
-10-
13. Counterparts.
This
Subscription Agreement may be executed in one or more counterparts, each of
which will be deemed an original but all of which together will constitute
one
and the same instrument. The execution of this Subscription Agreement may be
by
actual or facsimile signature.
14. Benefit.
Except
as otherwise set forth herein, this Subscription Agreement is binding upon
and
inures to the benefit of the parties hereto (and Xxxxxxx Securities to the
extent it is a third-party beneficiary hereof) and their respective heirs,
executors, personal representatives, successors and assigns. Xxxxxxx Securities
is a third-party beneficiary with respect to any sections hereof that so state
or that otherwise indicate that Xxxxxxx Securities would be entitled to rely
on
the representations, warranties or covenants made by me therein.
15. Notices.
All
notices, offers, acceptance and any other acts under this Subscription Agreement
(except payment) must be in writing, and is sufficiently given if delivered
to
the addressees in person, by overnight courier service, or, if mailed, postage
prepaid, by certified mail (return receipt requested), and will be effective
three days after being placed in the mail if mailed, or upon receipt or refusal
of receipt, if delivered personally or by courier or confirmed telecopy, in
each
case addressed to a party. All communications to me should be sent to my
preferred address on the signature page hereto. All communications to the
Company should be sent to:
|
000
00xx
Xxxxxx, Xxxxx 000
|
|
|
Xxxxxxx,
XX 00000
|
|
|
Tel:
000-000-0000
|
|
|
Fax:
000-000-0000
|
|
|
(or
to such person, address, and telephone and fax number set forth
in the
Company’s last filing with the SEC)
|
|
|
and
|
Xxxxxxx
Securities, LLC
|
|
0000
XXX Xxxxxxx, Xxxxx 0000
|
|
|
Xxxxxxxxx
Xxxxxxx, XX 00000
|
|
|
Attn:
Xxxxxxx X. Xxxxxxx
|
|
|
Tel.:
(000) 000-0000
|
|
|
Fax:
(000) 000-0000
|
16. Oral
Evidence.
This
Subscription Agreement constitutes the entire agreement between the parties
with
respect to the subject matter hereof and supersedes all prior oral and written
agreements between the parties hereto with respect to the subject matter hereof.
This Subscription Agreement may not be changed, waived, discharged, or
terminated orally, but rather, only by a statement in writing signed by the
party or parties against which enforcement or the change, waiver, discharge
or
termination is sought.
-11-
17. Section
Headings.
Section
headings herein have been inserted for reference only and will not be deemed
to
limit or otherwise affect, in any matter, or be deemed to interpret in whole
or
in part, any of the terms or provisions of this Subscription
Agreement.
18. Survival
of Representations, Warranties and Agreements.
The
representations, warranties and agreements contained herein will survive the
delivery of, and the payment for, the Units.
19. Acceptance
of Subscription.
The
Company may accept this Subscription Agreement at any time for all or any
portion of the Securities subscribed for by executing a copy hereof as provided
and notifying me within a reasonable time thereafter.
[SIGNATURE
PAGES FOLLOW]
-12-
SIGNATURE
PAGE FOR
INDIVIDUAL INVESTORS
-
COMPLETE ALL INFORMATION
Name:
________________________________________________ Name
of Joint Investor
(if
any): ____________________________________
Residence
Address:
__________________________________________________________________________________________________
Telephone:
(H)_______________________________ (W)_______________________________________
Fax __________________________
Occupation:__________________________________________________Employer:_______________________________________________
Business
Address:
___________________________________________________________________________________________________
Send
communications to:
¨ Home
¨ Office ¨ E-Mail:
______________________________________________________________________
Age:
_______________
Social
Security Number:
____________________
Check
manner in which securities are to be held:
|
¨ Individual
Ownership
|
¨ Tenants
in Common
|
¨ Joint
Tenants with
Right of Survivorship (both parties must sign) |
|
¨ Community
Property
|
¨ Other
(please indicate)
_______________________
|
|
Number
of
Units (minimum of 3 Units per Investor) :______________
Corresponding
dollar amount ($10,000 multiplied by number of Units):
$_______________
Accredited
Investor Status For Individuals.
(INVESTORS THAT ARE CORPORATIONS, LIMITED LIABILITY COMPANIES, PARTNERSHIPS,
REVOCABLE TRUSTS, IRREVOCABLE TRUSTS, EMPLOYEE BENEFIT PLAN TRUSTS AND
INDIVIDUAL RETIREMENT ACCOUNTS SHOULD IGNORE THE FOLLOWING QUESTIONS AND PROCEED
TO THE ENTITY SIGNATURE PAGE).
(a) I
am an
accredited investor within the meaning of Section 2(15) of the Securities Act
and Rule 501 promulgated thereunder because (check any boxes that
apply):
|
o
|
My
individual annual income during each of the two most recent years
exceeded
$200,000 and I expect my annual income during the current year will
exceed
$200,000.
|
-13-
|
o
|
If
I am married, my joint annual income with my spouse during each of
the two
most recent years exceeded $300,000 and I expect my joint annual
income
with my spouse during the current year will exceed
$300,000.
|
|
o
|
My
individual or joint (together with my spouse) net worth (including
my
home, home furnishings and automobiles) exceeds
$1,000,000.
|
(b) The
aggregate value of my assets is approximately $___________.
(c) My
aggregate liabilities are approximately $___________.
(d) My
current and expected income is:
|
YEAR
|
INCOME
|
||
|
2005
(Estimated)
|
$
|
||
|
2004
(Actual)
|
$
|
||
|
2003
(Actual)
|
$
|
||
I
hereby
confirm the information set forth above is true and correct in all respects
as
of the date hereof and will be on the date of the purchase of Units.
|
ALL
INVESTORS MUST SIGN AND PRINT NAME BELOW
Signature:_____________________________________________
Print
Name:____________________________________________
Date:_________________________________________________
Signature:_____________________________________________
Print
Name:____________________________________________
Date:_________________________________________________
|
The
foregoing subscription is accepted and the Company hereby agrees
to be
bound by its terms.
By:____________________________________________________
Name:__________________________________________________
Title:___________________________________________________
Date:___________________________________________________
|
-14-
SIGNATURE
PAGE FOR ENTITY
INVESTORS
-
COMPLETE ALL INFORMATION
Name
of Entity:
_______________________________________________________________________________________________
Address
of Principal Office:______________________________________________________________________________________
Telephone:
______________________________________________________________ Fax:
________________________________
Taxpayer
Identification Number:
____________________________
Check
type of Entity:
|
¨
|
Employee
Benefit Plan Trust
|
¨
|
Limited
Partnership
|
¨
|
General
Partnership
|
¨
|
Individual
Retirement Account
|
|||
|
¨
|
Limited
Liability Company
|
¨
|
Revocable
Trust
|
¨
|
Corporation
|
¨
|
Other
(please
indicate)
|
|
¨
|
Irrevocable
Trust (If the Investor is an Irrevocable Trust, a supplemental
questionnaire must be completed by the person directing the decision
for
the trust to determine by accredited investor status. Please contact
Xxxxxxx Securities for a copy of such supplemental
questionnaire.)
|
Number
of
Units (minimum 3 Units per Investor):______________
Corresponding
dollar amount ($10,000 multiplied by number of Units):
$_______________
Date
of Formation or incorporation:
____________ State
of Formation:
_____________________
Describe
the business of the Entity:
_________________________________________________________________________________
_____________________________________________________________________________________________________________
List
the names and positions
of the
executive officers, managing members, partners or trustees authorized to act
with respect to investments by the Entity generally and specify who has the
authority to act with respect to this investment.
|
Name
|
Position
|
Authority
for this investment (yes or no)
|
-15-
(a) Check
all
boxes which apply (XXX Entities can skip this question and go to
(b)):
|
o
|
The
Entity was not
formed for the specific purpose of investing in the
Company
|
|
o
|
The
Entity has total assets in excess of $5 million
dollars
|
|
o
|
For
Employee Benefit Plan Trusts Only:
The decision to invest in the Company was made by a plan fiduciary,
as
defined in Section 3(21) of ERISA, who is either a bank, insurance
company
or registered investment advisor.
|
(b) If
you
did not check the first two of the three boxes in Question (a) or
if the
Entity is an Individual Retirement Account, a Self-directed Employee Benefit
Plan Trust or an Irrevocable Trust, list the name of each person
who:
(i) owns
an
equity interest in the Entity (i.e., each shareholder if the Entity is a
corporation, each member if the Entity is a limited liability company and each
partner if the Entity is a partnership); or
(ii) is
a
grantor for the revocable trust or Individual Retirement Account;
or
(iii) is
the
person making the investment decision for a self-directed Employee Benefit
Plan
Trust; or
(iv) is
the
person making the investment decisions for an Irrevocable Trust.
___________________________ __________________________
___________________________ __________________________
EACH
PERSON LISTED ABOVE MUST SEPARATELY COMPLETE AND SUBMIT TO THE COMPANY THE
ANSWERS TO THE QUESTIONS FOLLOWING THE SIGNATURE BOX BELOW AND SIGN THE WRITTEN
CONFIRMATION IMMEDIATELY FOLLOWING.
|
INVESTOR:
____________________________________________________
Signature
of Authorized Signatory
Name:_______________________________________________
Title:________________________________________________
Date:________________________________________________
|
The
foregoing subscription is accepted and the Company hereby agrees
to be
bound by its terms.
By:_______________________________________________
Name:_____________________________________________
Title:______________________________________________
Date:______________________________________________
|
-16-
Accredited
Investor Questions for Entity equity owners and investment decision
makers
(a) I
am an
accredited investor within the meaning of Section 2(15) of the Securities Act
and Rule 501 promulgated thereunder because (check any boxes that
apply):
|
o
|
My
individual annual income during each of the two most recent years
exceeded
$200,000 and I expect my annual income during the current year will
exceed
$200,000.
|
|
o
|
If
I am married, my joint annual income with my spouse during each of
the two
most recent years exceeded $300,000 and I expect my joint annual
income
with my spouse during the current year will exceed
$300,000.
|
|
o
|
My
individual or joint (together with my spouse) net worth (including
my
home, home furnishings and automobiles) exceeds
$1,000,000.
|
(b) The
aggregate value of my assets is approximately $___________.
(c) My
aggregate liabilities are approximately $___________.
(d) My
current and expected income is:
|
YEAR
|
INCOME
|
|
|
2005
(Estimated)
|
$
|
|
|
2004
(Actual)
|
$
|
|
|
2003
(Actual)
|
$
|
|
I
hereby
confirm the information set forth above is true and correct in all respects
as
of the date hereof and will be on the date of the purchase of
Units.
Date:__________________________________
__________________________________
Name:
-00-
XXXXXXXX
XXXXXXXXXXXXX, INC.
NASD
QUESTIONNAIRE
INSTRUCTIONS
IMPORTANT:
PLEASE READ CAREFULLY BEFORE SIGNING. SIGNIFICANT REPRESENTATIONS ARE CONTAINED
IN THIS QUESTIONNAIRE.
|
1.
|
READ
ALL DEFINITIONS ON PAGES 18 AND 19 BEFORE ANSWERING ANY
QUESTIONS.
|
|
2.
|
EVERY
PERSON MUST ANSWER QUESTIONS 1 THROUGH 7 AND SIGN ON PAGE
21.
|
If
you
have any questions regarding this questionnaire, please call Xxxxxxx Xxxxxxx,
Esq., at Xxxxxxx & Xxxxxxx, (000) 000-0000.
-18-
| Affiliate: |
An
Affiliate of any person (for purposes hereof a “person” includes a
partnership, corporation or other legal entity such as a trust or
estate)
is a person which controls, is controlled by or is under common control
with such person. For purposes of this
definition:
|
(i) a
person
should be presumed to control a Member of the NASD if the person beneficially
owns 10% or more of the outstanding voting securities of a Member of the NASD
which is a corporation, or beneficially owns a partnership interest in 10%
or
more of the distributable profits or losses of a Member of the NASD which is
a
partnership;
(ii) a
Member
of the NASD should be presumed to control a person if the Member of the NASD
and
Persons Associated with a Member of the NASD beneficially own 10% or more of
the
outstanding voting securities of a person which is a corporation, or
beneficially own a partnership interest in 10% or more of the distributable
profits or losses of a person which is a partnership; and
(iii) a
person
should be presumed to be under common control with a Member of the NASD
if:
(1) the
same
person controls both the Member of the NASD and such person by beneficially
owning 10% or more of the outstanding voting securities of the Member of the
NASD and other such person which is a corporation, or by beneficially owning
a
partnership interest in 10% or more of the distributable profits or losses
of
the Member of the NASD and other such person which is a partnership;
or
(2) a
person
having the power to direct or cause the direction of the management or policies
of the Member of the NASD also has the power to direct or cause the direction
of
the management or policies of the other entity in question.
|
Immediate
Family:
|
The
“Immediate Family” of any person, including an employee of or Person
Associated with a Member of the NASD, includes the parents, mother-in-law,
father-in-law, husband or wife, brother or sister, brother-in-law
or
sister-in-law, son-in-law or daughter-in-law, and children of such
person
or any other individual who is supported, directly or indirectly,
to a
material extent by such person.
|
|
Member
of
the
NASD:
|
A
“Member of the NASD” is any broker or dealer admitted to membership in the
NASD.
|
-19-
| NASD: |
The
National Association of Securities Dealers,
Inc.
|
Person
Associated
with
a Member
of
the NASD: A
“Person
Associated with a Member of the NASD” is every sole proprietor, partner,
officer, director or branch manager of any Member of the NASD, or any natural
person occupying a similar status or performing similar functions, or any
natural person engaged in the investment banking or securities business who
is
directly or indirectly controlling or controlled by such Member of the NASD
(for
example, any employee), whether or not any such person is registered or exempt
from registration with the NASD.
Print
Name:__________________________
| 1. |
State
whether you or any of your Affiliates or any members of your Immediate
Family are
|
(a) a
Member
of the NASD;
¨ Yes ¨ No
(b) a
Person
Associated with a Member of the NASD; or
¨ Yes ¨ No
(c) an
Affiliate of a Member of the NASD.
¨ Yes ¨ No
|
2.
|
State
whether you or any of your Affiliates own stock or other securities
of any
Member of the NASD or an Affiliate of a Member of the
NASD.
|
¨ Yes ¨ No
|
3.
|
State
whether you or any of your Affiliates have made a subordinated
loan to any
Member of the NASD.
|
¨ Yes ¨ No
|
4.
|
If
you marked “Yes” to any of the questions above, please briefly describe
the facts below, giving the names of the Members of the NASD to which
your
answer refers (including, for example, percentage of ownership, amount
of
loan and interest payable, applicable dates, names of Affiliates,
immediate family, etc.).
|
-20-
State
whether you are an Immediate Family member of a partner of Xxxxxxx &
Xxxxxxx, counsel to AeroGrow.
¨ Yes ¨ No
| 6. |
(a) State
whether you provide any consulting or other services to
AeroGrow.
|
¨ Yes ¨ No
If
you
marked “Yes”, please briefly describe such services, including cash and non-cash
compensation received and attach copies of written agreements or correspondence
describing such services.
|
(b)
|
Please
identify any of the following relationships you have with the Placement
Agent or any other Member of the
NASD.
|
|
None
|
¨
|
|
Advisor
|
¨
|
|
Officer
|
¨
|
|
Director
|
¨
|
|
Trustee
|
¨
|
|
Founder
|
¨
|
|
Registered
Representative
|
¨
|
|
5%
Stockholder
|
¨
|
|
Employee
|
¨
|
|
Immediate
Family
|
¨
|
|
Broker/Dealer
|
¨
|
|
Promoter
|
¨
|
|
Consultant
|
¨
|
|
Finder
|
¨
|
|
Bridge
Lender
|
¨
|
-21-
|
General
Partner
|
¨
|
|
Limited
Partner
|
¨
|
|
Equity
Investor
|
¨
|
|
Client
or Customer
|
¨
|
|
Subordinated
Debt Holder
|
¨
|
|
Other
|
¨
|
Please
describe the nature of any relationship identified above. For example, if you
are an advisor, promoter, consultant or finder, describe the compensation you
received; if you are an equity investor, state the class of securities and
percentage interest you hold; and if you are an Immediate Family Member,
describe the exact relationship, including the name of the person to whom you
are related and the position such person holds with Underwriter or such other
Member of the NASD. Identify the Member of the NASD:
|
7.
|
State
whether you have any oral and/or written agreements with any Member
of the
NASD or Person Associated With a Member of the NASD concerning
the
disposition of your securities of
AeroGrow.
|
¨ Yes ¨ No
If
you
marked “Yes”, please briefly describe such agreement and attach copies of
written agreements or correspondence describing such arrangement.
|
I
hereby affirm that the answers to the above NASD Questionnaire
are true
and correct as of the date set forth
below.
|
Date:
________________________ _________________________________
__________________________________
(Sign
Name)
(Print
Name)
-22-