REGISTRATION RIGHTS AGREEMENT
Exhibit
10.31
REGISTRATION
RIGHTS AGREEMENT (this "Agreement"), dated as of
March 30, 2007, by and among AeroGrow International, Inc., a Nevada
corporation with headquarters located at 0000 Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxx 00000 (the "Company"), and
the undersigned buyers (each, an "Investor", and collectively,
the "Investors" as listed on
Exhibit A).
WHEREAS:
A. In
connection with the Securities Purchase Agreement by and among the parties
hereto dated as of March 30, 2007 (the "Securities Purchase
Agreement"), the Company has agreed, upon the terms and subject to the
conditions set forth in the Securities Purchase Agreement, to issue and sell
to
each Investor (i) shares of the Company's common stock, par value $0.001 per
share (the "Common Stock"), and (ii) warrants (the
"Warrants") which will be exercisable to purchase shares of
Common Stock (as exercised, collectively the "Warrant Shares")
in accordance with the terms of the Warrants.
B. To
induce the Investors to execute and deliver the Securities Purchase Agreement,
the Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended, and the rules and regulations thereunder,
or
any similar successor statute (collectively, the "1933 Act"),
and applicable state securities laws.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each of the
Investors hereby agree as follows:
1. Definitions.
Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Securities Purchase Agreement. As used in
this Agreement, the following terms shall have the following
meanings:
a. "Business
Day" means any day other than Saturday, Sunday or any other day on
which commercial banks in the City of New York are authorized or required by
law
to remain closed.
b. "Closing
Date" shall have the meaning set forth in the Securities Purchase
Agreement.
c. "Effective
Date" means the date the Registration Statement is declared effective
by the SEC.
d. "Effectiveness
Deadline" means the date that is 120 days after the Filing
Date.
e. "Filing
Date" means the date on which the Registration Statement (as defined
below) is filed with the SEC.
f. "Filing
Deadline" means the date that is 120 days after the Closing
Date.
g. "Investor"
means an Investor or any transferee or assignee thereof to whom an Investor
assigns its rights under this Agreement and who agrees to become bound by the
provisions of this Agreement in accordance with Section 9 and any transferee
or
assignee thereof to whom a transferee or assignee assigns its rights under
this
Agreement and who agrees to become bound by the provisions of this Agreement
in
accordance with Section 9.
h. "Person"
means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
i. "Public
Sale" means any sale of Registrable Securities to the public pursuant
to a public offering registered under the 1933 Act or to the public through
a
broker or market-maker pursuant to the provisions of Rule 144 (or any successor
rule) adopted under the 1933 Act.
j. "register,"
"registered," and "registration" refer to a
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant
to
Rule 415 and the declaration or ordering of effectiveness of such Registration
Statement(s) by the SEC.
j. "Registrable
Securities" means (i) the Common Stock, (ii) the Warrant Shares issued
or issuable upon exercise of the Warrants, and (iii) any capital stock of the
Company issued or issuable with respect to the Common Stock, the Warrant Shares,
or the Warrants as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, without regard to
any
limitations on exercise of the Warrants, provided that Registrable
Securities shall not include shares of Common Stock or other securities that
have been sold in a Public Sale or held by an Investor whose entire holdings
of
Registrable Securities are then eligible for resale without registration and
without regard to volume or time limitations under Rule 144 under the 1933
Act,
as such rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
k. "Registration
Statement" means a registration statement or registration statements of
the Company filed under the 1933 Act covering the Registrable
Securities. "Registration Statement" means a
registration statement or registration statements of the Company filed under
the
1933 Act covering the Registrable Securities.
l. "Required
Holders" means the holders of at least a majority of the Registrable
Securities.
m. "Required
Registration Amount" means the sum of (i) the number of Common Stock
issued and, (ii) 100% of the maximum number of Warrant Shares issued and
issuable pursuant to the Warrants as of the trading day immediately preceding
the applicable date of determination, all subject to adjustment as provided
in
Section 2(d).
n. "Rule
415" means Rule 415 under the 1933 Act or any successor rule providing
for offering securities on a continuous or delayed basis.
o. "SEC"
means the United States Securities and Exchange Commission.
2. Registration.
a. Mandatory
Registration. The Company shall prepare, and, as soon as
practicable, but in no event later than the Filing Deadline, file with the
SEC
the Registration Statement on Form SB-2 covering the resale of all of the
Registrable Securities. In the event that Form SB-2 is unavailable
for such a registration, the Company shall use such other form as is available
for such a registration on another appropriate form reasonably acceptable to
the
Required Holders, subject to the provisions of Section 2(c). The
Registration Statement prepared pursuant hereto shall register for resale at
least the number of shares of Common Stock equal to the Required Registration
Amount determined as of date the Registration Statement is initially filed
with
the SEC. The Registration Statement shall contain (except if
otherwise directed by the Required Holders) the "Selling Stockholders"
and "Plan of Distribution" sections in substantially the form attached
hereto as Exhibit B. The Company shall use its best efforts to
have the Registration Statement declared effective by the SEC as soon as
practicable, but in no event later than the Effectiveness Deadline.
b. Allocation
of Registrable Securities. The initial number of Registrable
Securities included in any Registration Statement and any increase in the number
of Registrable Securities included therein shall be allocated pro rata among
the
Investors based on the number of Registrable Securities held by each Investor
at
the time the Registration Statement covering such initial number of Registrable
Securities or increase thereof is declared effective by the SEC. In
the event that an Investor sells or otherwise transfers any of such Investor's
Registrable Securities in any manner that leaves the Common Stock so transferred
ineligible for resale without registration, each transferee shall be allocated
a
pro rata portion of the then remaining number of Registrable Securities included
in such Registration Statement for such transferor.
c. Ineligibility
for Form SB-2 or S-3. In the event that neither Form SB-2 nor
Form S-3 is available for the registration of the resale of Registrable
Securities hereunder, the Company shall (i) register the resale of the
Registrable Securities on another appropriate form reasonably acceptable to
the
Required Holders and (ii) undertake to register the Registrable Securities
on
Form SB-2 or S-3 as soon as either such form is available, provided that the
Company shall maintain the effectiveness of the Registration Statement then
in
effect until such time as a Registration Statement on Form SB-2 or Form S-3
covering the Registrable Securities has been declared effective by the
SEC.
d. Sufficient
Number of Shares Registered. In the event the number of shares
available under a Registration Statement filed pursuant to Section 2(a) is
insufficient to cover all of the Registrable Securities required to be covered
by such Registration Statement or an Investor's allocated portion of the
Registrable Securities pursuant to Section 2(b), the Company shall amend the
applicable Registration Statement, or file a new Registration Statement (on
the
short form available therefor, if applicable), or both, so as to cover at least
the Required Registration Amount as of the trading day immediately preceding
the
date of the filing of such amendment or new Registration Statement, in each
case, as soon as practicable, but in any event not later than fifteen days
after
the necessity therefor arises. The Company shall use its best efforts
to cause such amendment and/or new Registration Statement to become effective
as
soon as practicable following the filing thereof. For purposes of the
foregoing provision, the number of shares available under a Registration
Statement shall be deemed "insufficient to cover all of the Registrable
Securities" if at any time the number of shares of Common Stock available for
resale under the Registration Statement is less than the product determined
by
multiplying (i) the Required Registration Amount as of such time less that
number of shares of Common Stock that have already been sold pursuant to
transactions covered by the Registration Statement by (ii) 0.90. The
calculation set forth in the foregoing sentence shall be made without regard
to
any limitations on the exercise of the Warrants and such calculation shall
assume that the Warrants are then exercisable for shares of Common Stock at
the
then prevailing Exercise Price (as defined in the Warrants).
e. Effect
of Failure to File and Obtain and Maintain Effectiveness of Registration
Statement. If, during the period from the Closing Date until the
second anniversary of the Closing Date (i) the Registration Statement covering
all of the Registrable Securities required to be covered thereby and required
to
be filed by the Company pursuant to this Agreement is (A) not filed with the
SEC
on or before the Filing Deadline (a "Filing Failure") or (B)
not declared effective by the SEC on or before the Effectiveness Deadline (an
"Effectiveness Failure") or (ii) after the Effective Date sales
of all of the Registrable Securities required to be included on such
Registration Statement cannot be made (other than during an Allowable Grace
Period (as defined in Section 3(p)) pursuant to such Registration Statement
or
otherwise (including, without limitation, because of a failure to keep such
Registration Statement effective, to disclose such information as is necessary
for sales to be made pursuant to such Registration Statement, to register a
sufficient number of shares of Common Stock or to maintain the listing of the
shares of Common Stock) (a "Maintenance Failure") then, as
partial relief for the damages to any holder by reason of any such delay in
or
reduction of its ability to sell the underlying shares of Common Stock (which
remedy shall not be exclusive of any other remedies available at law or in
equity), the Company shall pay to each holder of Registrable Securities relating
to such Registration Statement an amount in cash equal to one percent of the
aggregate Purchase Price (as such term is defined in the Securities Purchase
Agreement) of such Investor's Registrable Securities included in such
Registration Statement on each of the following dates: (i) the day of a Filing
Failure and on every thirtieth day (pro rated for periods totaling less than
thirty days) thereafter until such Filing Failure is cured, and (ii) the day
of
an Effectiveness Failure and on every thirtieth day (pro rated for periods
totaling less than thirty days) thereafter until such Effectiveness Failure
is
cured, and (iii) the initial day of a Maintenance Failure and on every thirtieth
day (pro rated for periods totaling less than thirty days) thereafter until
such
Maintenance Failure is cured. The payments to which a holder shall be
entitled pursuant to this Section 2(e) are referred to herein as
"Registration Delay Payments." Registration Delay
Payments shall be paid on the day of the Filing Failure, Effectiveness Failure
or the initial day of Maintenance Failure, as applicable, and thereafter on
the
earlier of (I) the thirtieth day after the event or failure giving rise to
a
Registration Delay Payments occurs, or (II) the third Business Day after the
event or failure giving rise to the Registration Delay Payments is
cured. In the event the Company fails to make Registration Delay
Payments in a timely manner, such Registration Delay Payments shall bear
interest at the rate of one and one-half percent per month (prorated for partial
months) until paid in full. Notwithstanding anything herein or in the
Securities Purchase Agreement to the contrary in no event shall the aggregate
amount of Registration Delay Payments (other than Registration Delay Payments
payable pursuant to events that are within the control of the Company) exceed,
in the aggregate, ten percent of the aggregate Purchase Price.
3. Related
Obligations.
At
such
time as the Company is obligated to file a Registration Statement with the
SEC
pursuant to Section 2(a) or 2(d), the Company will use its best efforts to
effect the registration of the Registrable Securities in accordance with the
intended method of disposition thereof and, pursuant thereto, the Company shall
have the following obligations:
a. The
Company shall submit to the SEC, within two Business Days after the Company
learns that no review of a particular Registration Statement will be made by
the
staff of the SEC or that the staff has no further comments on a particular
Registration Statement, as the case may be, a request for acceleration of
effectiveness of such Registration Statement to a time and date not later than
three business days after the submission of such request. The Company
shall keep each Registration Statement effective pursuant to Rule 415 at all
times until the earlier of (i) the date as of which the Investors may sell
all
of the Registrable Securities covered by such Registration Statement without
restriction pursuant to Rule 144(k) (or any successor thereto) promulgated
under
the 1933 Act and is not otherwise prohibited by the SEC or any statute, rule,
regulation or other applicable law from selling any such Registrable Securities
pursuant to such Rule or (ii) the date on which the Investors shall have sold
all of the Registrable Securities covered by such Registration Statement (the
"Registration Period"). The Company shall ensure
that each Registration Statement (including any amendments or supplements
thereto and prospectuses contained therein) shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein (in the case of
prospectuses, in the light of the circumstances in which they were made) not
misleading.
b. The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and
the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may
be
necessary to keep such Registration Statement effective at all times during
the
Registration Period, and, during such period, comply with the provisions of
the
1933 Act with respect to the disposition of all Registrable Securities of the
Company covered by such Registration Statement until such time as all of such
Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth
in
such Registration Statement. In the case of amendments and
supplements to a Registration Statement which are required to be filed pursuant
to this Agreement (including pursuant to this Section 3(b)) by reason of the
Company filing a report on Form 10-QSB, Form 10-KSB or any analogous report
under the Securities Exchange Act of 1934, as amended (the "1934
Act"), the Company shall have incorporated such report by reference
into such Registration Statement, if applicable, or shall file such amendments
or supplements with the SEC on the same day on which the 1934 Act report is
filed which created the requirement for the Company to amend or supplement
such
Registration Statement.
c. Upon
request, the Company shall furnish to each Investor whose Registrable Securities
are included in any Registration Statement, without charge, (i)
promptly after the same is prepared and filed with the SEC, one copy of such
Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference,
if
requested by an Investor, all exhibits and each preliminary prospectus, (ii)
upon the effectiveness of any Registration Statement, up to ten copies of the
prospectus included in such Registration Statement and all amendments and
supplements thereto (or such other number of copies as such Investor may
reasonably request), and (iii) such other documents, including copies of any
preliminary or final prospectus, as such Investor may reasonably request from
time to time in order to facilitate the disposition of the Registrable
Securities owned by such Investor.
d. The
Company shall use its best efforts to (i) register and qualify, unless an
exemption from registration and qualification applies, the resale by Investors
of the Registrable Securities covered by a Registration Statement under such
other securities or "blue sky" laws of all jurisdictions in the United States
as
may be requested in writing by an Investor, (ii) prepare and file in those
jurisdictions, such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (y) subject itself
to general taxation in any such jurisdiction, or (z) file a general consent
to
service of process in any such jurisdiction. The Company shall
promptly notify each Investor who holds Registrable Securities of the receipt
by
the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or "blue sky" laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threatening of any
proceeding for such purpose.
e. The
Company shall notify each Investor in writing of the happening of any event,
as
promptly as practicable after becoming aware of such event, as a result of
which
the prospectus included in a Registration Statement, as then in effect, includes
an untrue statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements therein,
in
the light of the circumstances under which they were made, not misleading
(provided that in no event shall such notice contain any material, nonpublic
information), and, subject to Section 3(p), promptly prepare a supplement or
amendment to such Registration Statement to correct such untrue statement or
omission, and upon request deliver ten copies of such supplement or amendment
to
each Investor (or such other number of copies as such Investor may reasonably
request). The Company shall also promptly notify each Investor in
writing and by overnight mail, (i) of any request by the SEC for amendments
or
supplements to a Registration Statement or related prospectus or related
information, and (ii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be
appropriate.
f. The
Company shall use its best efforts to prevent the issuance of any stop order
or
other suspension of effectiveness of a Registration Statement, or the suspension
of the qualification of any of the Registrable Securities for sale in any
jurisdiction and, if such an order or suspension is issued, to obtain the
withdrawal of such order or suspension at the earliest possible moment and
to
notify each Investor who holds Registrable Securities being sold of the issuance
of such order and the resolution thereof or its receipt of actual notice of
the
initiation or threat of any proceeding for such purpose.
g. If
any
Investor is required under applicable securities laws to be described in the
Registration Statement as an underwriter, at the reasonable request of such
Investor, the Company shall furnish to such Investor, on the date of the
effectiveness of the Registration Statement and thereafter from time to time
on
such dates as an Investor may reasonably request (i) a letter, dated such date,
from the Company's independent certified public accountants in form and
substance as is customarily given by independent certified public accountants
to
underwriters in an underwritten public offering, addressed to the Investors,
and
(ii) an opinion, dated as of such date, of counsel representing the Company
for
purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
Investors.
h. If
any
Investor is required under applicable securities laws to be described in the
Registration Statement as an underwriter, then at the request of such Investor
in connection with such Investor's due diligence requirements, the Company
shall
make available for inspection by (i) such Investor, (ii) legal counsel for
such
investor and (iii) one firm of accountants or other agents retained by such
Investors (collectively, the "Inspectors"), all pertinent
financial and other records, and pertinent corporate documents and properties
of
the Company (collectively, the "Records"), as shall be
reasonably deemed necessary by each Inspector, and cause the Company's officers,
directors and employees to supply all information which any Inspector may
reasonably request; provided, however, that each Inspector shall agree to hold
in strict confidence and shall not make any disclosure (except to an Investor)
or use of any Record or other information which the Company determines in good
faith to be confidential, and of which determination the Inspectors are so
notified, unless (a) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement or is otherwise
required under the 1933 Act, (b) the release of such Records is ordered pursuant
to a final, non-appealable subpoena or order from a court or government body
of
competent jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in violation of
this
or any other agreement of which the Inspector has knowledge. Each
Investor agrees that it shall, upon learning that disclosure of such Records
is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to the Company and allow the Company,
at
its expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, the Records deemed
confidential. Nothing herein (or in any other confidentiality
agreement between the Company and any Investor) shall be deemed to limit the
Investors' ability to sell Registrable Securities in a manner which is otherwise
consistent with applicable laws and regulations.
i. The
Company shall hold in confidence and not make any disclosure of information
concerning an Investor provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to
the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that
disclosure of such information concerning an Investor is sought in or by a
court
or governmental body of competent jurisdiction or through other means, give
prompt written notice to such Investor and allow such Investor, at the
Investor's expense, to undertake appropriate action to prevent disclosure of,
or
to obtain a protective order for, such information.
j. The
Company shall use its best efforts either to (i) cause all of the Registrable
Securities covered by a Registration Statement to be listed on each securities
exchange on which securities of the same class or series issued by the Company
are then listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, or (ii) secure designation and
quotation of all of the Registrable Securities covered by a Registration
Statement on The NASDAQ Capital Market, or (iii) if, despite the Company's
best
efforts to satisfy, the preceding clauses (i) and (ii) the Company is
unsuccessful in satisfying the preceding clauses (i) and (ii), to secure the
inclusion for quotation on The NASDAQ Capital Market or the American Stock
Exchange for such Registrable Securities and, without limiting the generality
of
the foregoing, to use its best efforts to arrange for at least two market makers
to register with the National Association of Securities Dealers, Inc.
("NASD") as such with respect to such Registrable
Securities. The Company shall pay all fees and expenses in connection
with satisfying its obligation under this Section 3(j).
k. The
Company shall cooperate with the Investors who hold Registrable Securities
being
sold pursuant to the Registration Statement and, to the extent applicable,
facilitate the timely preparation and delivery of certificates (not bearing
any
restrictive legend) representing the shares that were Registrable Securities
prior to their sale under the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as
the
Investors may reasonably request and registered in such names as the Investors
may request.
l. If
requested by an Investor, the Company shall (i) as soon as practicable
incorporate in a prospectus supplement or post-effective amendment such
information as an Investor reasonably requests to be included therein relating
to the sale and distribution of Registrable Securities, including, without
limitation, information with respect to the number of Registrable Securities
being offered or sold, the purchase price being paid therefor and any other
terms of the offering of the Registrable Securities to be sold in such offering;
(ii) as soon as practicable make all required filings of such prospectus
supplement or post-effective amendment after being notified of the matters
to be
incorporated in such prospectus supplement or post-effective amendment; and
(iii) as soon as practicable, supplement or make amendments to any Registration
Statement if reasonably requested by an Investor holding any Registrable
Securities.
m. The
Company shall use its best efforts to cause the Registrable Securities covered
by a Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to consummate the
disposition of such Registrable Securities.
n. The
Company shall make generally available to its security holders as soon as
practical, but not later than ninety days after the close of the period covered
thereby, an earnings statement (in form complying with, and in the manner
provided by, the provisions of Rule 158 under the 0000 Xxx) covering a
twelve-month period.
o. The
Company shall otherwise use its best efforts to comply with all applicable
rules
and regulations of the SEC in connection with any registration
hereunder.
p. Notwithstanding
anything to the contrary herein, at any time after the Effective Date, the
Company may delay the disclosure of material, non-public information concerning
the Company the disclosure of which at the time is not, in the good faith
opinion of the Board of Directors of the Company and its counsel, in the best
interest of the Company and, in the opinion of counsel to the Company, otherwise
required (a "Grace Period"); provided, that the Company shall
promptly (i) notify the Investors in writing of the existence of material,
non-public information giving rise to a Grace Period (provided that in each
notice the Company will not disclose the content of such material, non-public
information to the Investors) and the date on which the Grace Period will begin,
and (ii) notify the Investors in writing of the date on which the Grace Period
ends; and, provided further, that no Grace Period shall exceed five consecutive
days and during any three-hundred-sixty-five day period such Grace Periods
shall
not exceed an aggregate of twenty days and the first day of any Grace Period
must be at least five trading days after the last day of any prior Grace Period
(each, an "Allowable Grace Period"). For purposes of
determining the length of a Grace Period above, the Grace Period shall begin
on
and include the date the Investors receive the notice referred to in clause
(i)
and shall end on and include the later of the date the Investors receive the
notice referred to in clause (ii) and the date referred to in such
notice. The provisions of Section 3(e) hereof shall not be applicable
during the period of any Allowable Grace Period. Upon expiration of
the Grace Period, the Company shall again be bound by the first sentence of
Section 3(e) with respect to the information giving rise thereto unless such
material, non-public information is no longer
applicable. Notwithstanding anything to the contrary, the Company
shall cause its transfer agent to deliver unlegended shares of Common Stock
to a
transferee of an Investor in accordance with the terms of the Securities
Purchase Agreement in connection with any sale of Registrable Securities with
respect to which an Investor has entered into a contract for sale, and delivered
a copy of the prospectus included as part of the applicable Registration
Statement (unless an exemption from such prospectus delivery requirements
exists), prior to the Investor's receipt of the notice of a Grace Period and
for
which the Investor has not yet settled.
4. Obligations
of the Investors.
a. At
least
five Business Days prior to the first anticipated filing date of a Registration
Statement, the Company shall notify each Investor in writing of the information
the Company requires from each such Investor if such Investor elects to have
any
of such Investor's Registrable Securities included in such Registration
Statement. It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the
effectiveness of the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company
may
reasonably request.
b. Each
Investor, by such Investor's acceptance of the Registrable Securities, agrees
to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement hereunder, unless
such Investor has notified the Company in writing of such Investor's election
to
exclude all of such Investor's Registrable Securities from such Registration
Statement.
c. Each
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(f) or the first
sentence of 3(e), such Investor will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement(s) covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(e) or Section
3(f)
or receipt of notice that no supplement or amendment is
required. Notwithstanding anything to the contrary, the Company shall
cause its transfer agent to deliver unlegended shares of Common Stock to a
transferee of an Investor in connection with any sale of Registrable Securities
covered by the Registration Statement and with respect to which an Investor
has
entered into a contract for sale prior to the Investor's receipt of a notice
from the Company of the happening of any event of the kind described in Section
3(e) or Section 3(f) and for which the Investor has not yet
settled.
d. Each
Investor covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 Act as applicable to it or an exemption therefrom
in
connection with sales of Registrable Securities pursuant to the Registration
Statement.
5. Expenses
of Registration.
All
reasonable expenses, other than underwriting discounts and commissions, incurred
in connection with registrations, filings or qualifications pursuant to Sections
2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements
of
counsel for the Company shall be paid by the Company.
6. Indemnification.
In
the
event any Registrable Securities are included in a Registration Statement under
this Agreement:
a. To
the
fullest extent permitted by law, the Company will, and hereby does, indemnify,
hold harmless and defend each Investor, the directors, officers, members,
partners, employees, agents, representatives of, and each Person, if any, who
controls any Investor within the meaning of the 1933 Act or the 1934 Act (each,
an "Indemnified Person"), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys'
fees, amounts paid in settlement or expenses, joint or several, (collectively,
"Claims") incurred in investigating, preparing or defending any
action, claim, suit, inquiry, proceeding, investigation or appeal taken from
the
foregoing by or before any court or governmental, administrative or other
regulatory agency, body or the SEC, whether pending or threatened, whether
or
not an indemnified party is or may be a party thereto ("Indemnified
Damages"), to which any of them may become subject insofar as such
Claims (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon: (i) any untrue statement or
alleged untrue statement of a material fact in a Registration Statement or
any
post-effective amendment thereto or in any filing made in connection with the
qualification of the offering under the securities or other "blue sky" laws
of
any jurisdiction in which Registrable Securities are offered ("Blue Sky
Filing"), or the omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus if used prior to the effective
date
of such Registration Statement, or contained in the final prospectus (as amended
or supplemented, if the Company files any amendment thereof or supplement
thereto with the SEC) or the omission or alleged omission to state therein
any
material fact necessary to make the statements made therein, in the light of
the
circumstances under which the statements therein were made, not misleading,
or
(iii) any violation or alleged violation by the Company of the 1933 Act,
the 1934 Act, any other law, including, without limitation, any state securities
law, or any rule or regulation thereunder relating to the offer or sale of
the
Registrable Securities pursuant to a Registration Statement or (the matters
in
the foregoing clauses (i) through (iii) being, collectively,
"Violations"). Subject to Section 6(c), the Company
shall reimburse the Indemnified Persons, promptly as such expenses are incurred
and are due and payable, for any legal fees or other reasonable expenses
incurred by them in connection with investigating or defending any such
Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (A) shall
not apply to a Claim by an Indemnified Person arising out of or based upon
a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person for such
Indemnified Person expressly for use in connection with the preparation of
the
Registration Statement or any such amendment thereof or supplement thereto,
if
such prospectus was timely made available by the Company pursuant to Section
3(d) and (B) shall not be available to the extent such Claim is based on a
failure of the Investor to deliver or to cause to be delivered the prospectus
made available by the Company, including a corrected prospectus, if such
prospectus or corrected prospectus was timely made available by the Company
pursuant to Section 3(d); and (C) shall not apply to amounts paid in settlement
of any Claim if such settlement is effected without the prior written consent
of
the Company, which consent shall not be unreasonably withheld or
delayed. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person
and shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9.
b. In
connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is set
forth in Section 6(a), the Company, each of its directors, each of its officers
who signs the Registration Statement and each Person, if any, who controls
the
Company within the meaning of the 1933 Act or the 1934 Act (each, an
"Indemnified Party"), against any Claim or Indemnified Damages
to which any of them may become subject, under the 1933 Act, the 1934 Act or
otherwise, insofar as such Claim or Indemnified Damages arise out of or are
based upon any Violation, in each case to the extent, and only to the extent,
that such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Investor expressly for use in
connection with such Registration Statement; and, subject to Section 6(c),
such
Investor will reimburse any legal or other expenses reasonably incurred by
an
Indemnified Party in connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in this Section 6(b)
and the agreement with respect to contribution contained in Section 7 shall
not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent shall not
be
unreasonably withheld or delayed; provided, further, however, that the Investor
shall be liable under this Section 6(b) for only that amount of a Claim or
Indemnified Damages as does not exceed the net proceeds to such Investor as
a
result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9.
c. Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section
6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person
or
Indemnified Party shall, if a Claim in respect thereof is to be made against
any
indemnifying party under this Section 6, deliver to the indemnifying party
a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party
so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as
the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses of
not
more than one counsel for such Indemnified Person or Indemnified Party to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by
such
counsel in such proceeding. In the case of an Indemnified Person,
legal counsel referred to in the immediately preceding sentence shall be
selected by the Investors holding at least a majority in
interest of the Registrable Securities included in the Registration Statement
to
which the Claim relates. The Indemnified Party or Indemnified Person
shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or Claim by the indemnifying party
and
shall furnish to the indemnifying party all information reasonably available
to
the Indemnified Party or Indemnified Person which relates to such action or
Claim. The indemnifying party shall keep the Indemnified Party or
Indemnified Person reasonably apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim
or
proceeding effected without its prior written consent, provided, however, that
the indemnifying party shall not unreasonably withhold, delay or condition
its
consent. No indemnifying party shall, without the prior written
consent of the Indemnified Party or Indemnified Person, consent to entry of
any
judgment or enter into any settlement or other compromise which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to
such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such Claim or litigation, and such settlement shall not include
any
admission as to fault on the part of the Indemnified Party. Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person with
respect to all third parties, firms or corporations relating to the matter
for
which indemnification has been made. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement
of
any such action shall not relieve such indemnifying party of any liability
to
the Indemnified Person or Indemnified Party under this Section 6, except to
the
extent that the indemnifying party is prejudiced in its ability to defend such
action.
d. The
indemnification required by this Section 6 shall be made by periodic payments
of
the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Damages are incurred.
e. The
indemnity agreements contained herein shall be in addition to (i) any cause
of
action or similar right of the Indemnified Party or Indemnified Person against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.
7. Contribution.
To
the
extent any indemnification by an indemnifying party is prohibited or limited
by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that: (i) no
Person involved in the sale of Registrable Securities which Person is guilty
of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) in connection with such sale shall be entitled to contribution from any
Person involved in such sale of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received
by
such seller from the sale of such Registrable Securities pursuant to such
Registration Statement.
8. Reports
Under the 1934 Act.
With
a
view to making available to the Investors the benefits of Rule 144 promulgated
under the 1933 Act or any other similar rule or regulation of the SEC that
may
at any time permit the Investors to sell securities of the Company to the public
without registration ("Rule 144"), the Company agrees
to:
a. make
and
keep public information available, as those terms are understood and defined
in
Rule 144;
b. file
with
the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements and the filing of such reports and other documents
is required for the applicable provisions of Rule 144; and
c. furnish
to each Investor so long as such Investor owns Registrable Securities, promptly
upon request, (i) a written statement by the Company, if true, that it has
complied with the reporting requirements of Rule 144, the 1933 Act and the
1934
Act, (ii) a copy of the most recent annual or quarterly report of the Company
and such other reports and documents so filed by the Company, and (iii) such
other information as may be reasonably requested to permit the Investors to
sell
such securities pursuant to Rule 144 without registration.
9. Assignment
of Registration Rights.
The
rights under this Agreement shall be automatically assignable by the Investors
to any transferee of all or any portion of such Investor's Registrable
Securities if: (i) the Investor agrees in writing with the transferee
or assignee to assign such rights, and a copy of such agreement is furnished
to
the Company within a reasonable time after such assignment; (ii) the Company
is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee,
and
(b) the securities with respect to which such registration rights are being
transferred or assigned; (iii) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee is
restricted under the 1933 Act and applicable state securities laws; (iv) at
or
before the time the Company receives the written notice contemplated by clause
(ii) of this sentence the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein; and (v) such
transfer shall have been made in accordance with the applicable requirements
of
the Securities Purchase Agreement.
10. Amendment
of Registration Rights.
Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Required
Holders. Any amendment or waiver effected in accordance with this
Section 10 shall be binding upon each Investor and the Company. No
such amendment shall be effective to the extent that it applies to less than
all
of the holders of the Registrable Securities. No consideration shall
be offered or paid to any Person to amend or consent to a waiver or modification
of any provision of any of this Agreement unless the same consideration also
is
offered to all of the parties to this Agreement.
11. Miscellaneous.
a. A
Person
is deemed to be a holder of Registrable Securities whenever such Person owns
or
is deemed to own of record such Registrable Securities. If the
Company receives conflicting instructions, notices or elections from two or
more
Persons with respect to the same Registrable Securities, the Company shall
act
upon the basis of instructions, notice or election received from such record
owner of such Registrable Securities.
b. Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally;
(ii) upon receipt, when sent by facsimile (provided confirmation of transmission
is mechanically or electronically generated and kept on file by the sending
party); or (iii) one Business Day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such
communications shall be:
If
to
Company (prior to consummation of the transactions contemplated by the Exchange
Agreement):
0000
Xxxxxxx Xxxxx, Xxxxx
000
Xxxxxxx,
XX 00000
Telephone:
(000)
000-0000
Facsimile:
(000)
000-0000
Attention:
Xxxxxxx
Xxxxxxxxxx, President
and
with
a
copy to:
Xxxxxx,
Xxxx &
Xxxxxxxx
0000
Xxxxxxxxxx, Xxxxx
0000
Xxxxxx,
XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxxx
X. Xxxxxx
If
to an
Investor, to its address and facsimile number set forth on the Schedule of
Investors attached hereto, with copies to such Investor's representatives as
set
forth on the Schedule of Investors, or to such other address and/or facsimile
number and/or to the attention of such other Person as the recipient party
has
specified by written notice given to each other party five days prior to the
effectiveness of such change. Written confirmation of receipt (A)
given by the recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
c. Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as
a
waiver thereof.
d. This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Colorado as such laws are applied to contracts made and to be fully
performed entirely within that state between residents of that
state. The parties hereto (i) agree that any legal suit, action or
proceeding arising out of or relating to the transactions contemplated by this
Agreement shall be instituted exclusively in the federal courts located in
Denver, Colorado, U.S.A., (ii) waive 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, and (iii) irrevocably consent to the jurisdiction of the
federal courts located in Denver, Colorado, U.S.A. in any such suit, action
or
proceeding, and each party further agrees to accept and acknowledge service
or
any and all process that may be served in any such suit, action or proceeding
in
the federal courts located in Denver, Colorado, U.S.A. in person or by certified
mail addressed as provided in Section 11(b).
e. This
Agreement, the other Transaction Documents (as defined in the Securities
Purchase Agreement) and the instruments referenced herein and therein constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties
or undertakings, other than those set forth or referred to herein and
therein. This Agreement, the other Transaction Documents and the
instruments referenced herein and therein supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.
f. Subject
to the requirements of Section 9, this Agreement shall inure to the benefit
of
and be binding upon the permitted successors and assigns of each of the parties
hereto.
g. The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
h. This
Agreement may be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
i. Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
j. All
consents and other determinations required to be made by the Investors pursuant
to this Agreement shall be made, unless otherwise specified in this Agreement,
by the Required Holders.
k. The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent and no rules of strict construction
will
be applied against any party.
l. This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.
m. The
obligations of each Investor hereunder are several and not joint with the
obligations of any other Investor, and no provision of this Agreement is
intended to confer any obligations on any Investor vis-à-vis any other
Investor. Nothing contained herein, and no action taken by any
Investor pursuant hereto, shall be deemed to constitute the Investors as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Investors are in any way acting in concert or
as a
group with respect to such obligations or the transactions contemplated
herein.
n. Currency. As
used herein, "Dollar", "US Dollar" and "$" each mean the lawful money of the
United States.
*
* * * *
*
IN
WITNESS WHEREOF, each Investor and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.
|
COMPANY:
|
|
|
AEROGROW
INTERNATIONAL, NC.
|
|
|
By:__________________________________
Name:
Title:
|
|
IN
WITNESS WHEREOF, each Investor and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.
|
BUYERS:
|
|
|
[LEAD
BUYER]
|
|
|
By:__________________________________
Name:
Title:
|
|
IN
WITNESS WHEREOF, each Investor and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.
|
[OTHER
BUYERS]
|
|
|
By:__________________________________
Name:
Title:
|
|
EXHIBIT
A
SCHEDULE
OF BUYERS
|
Investor
|
Investor's
Address
and
Facsimile Number
|
Investor's
Representative's Address
and
Facsimile Number
|
EXHIBIT
B
SELLING
STOCKHOLDERS
The
shares of common stock being offered by the selling stockholders are those
previously issued to the Selling Stockholders and those issuable to the Selling
Stockholders upon exercise of the warrants. For additional
information regarding the issuances of common stock and the warrants, see
"Private Placement of Common Stock and Warrants" above. We are
registering the shares of common stock in order to permit the selling
stockholders to offer the shares for resale from time to time. Except
for the ownership of the shares of common stock and the warrants, the selling
stockholders have not had any material relationship with us within the past
three years.
The
table
below lists the selling stockholders and other information regarding the
beneficial ownership of the shares of common stock by each of the selling
stockholders. The second column lists the number of shares of common
stock beneficially owned by each selling shareholder, based on its ownership
of
the shares of common stock and the warrants, as of ________, 2007, assuming
exercise of the warrants held by the selling stockholders on that date, without
regard to any limitations on exercise.
The
third
column lists the shares of common stock being offered by this prospectus by
the
selling stockholders.
In
accordance with the terms of registration rights agreements with the holders
of
the shares of common stock and the warrants, this prospectus generally covers
the resale of at least the sum of (i) the number of shares of common stock
issued and (ii) 150% of the number of shares of common stock issued and issuable
upon exercise of the related warrants, determined as if the outstanding warrants
were exercised, as applicable, in full, as of the trading day immediately
preceding the date this registration statement was initially filed with the
SEC. The fourth column assumes the sale of all of the shares offered
by the selling stockholders pursuant to this prospectus.
Under
the
terms of the warrants, a selling stockholder may not exercise the warrants,
to
the extent such exercise would cause such selling stockholder, together with
its
affiliates, to beneficially own a number of shares of common stock which would
exceed 4.99% of our then outstanding shares of common stock following such
exercise, excluding for purposes of such determination shares of common stock
issuable upon exercise of the warrants which have not been
exercised. The number of shares in the second column does not reflect
this limitation. The selling stockholders may sell all, some or none
of their shares in this offering. See "Plan of
Distribution."
|
Name
of Selling Stockholder
|
Number
of Shares of Common Stock
Owned
Prior to Offering
|
Maximum
Number of Shares of Common Stock to be Sold Pursuant to this
Prospectus
|
Number
of Shares of Common Stock Owned After Offering
|
|
0
|
|||
PLAN
OF DISTRIBUTION
We
are
registering the shares of common stock previously issued and the shares of
common stock issuable upon exercise of the warrants to permit the resale of
these shares of common stock by the holders of the common stock and warrants
from time to time after the date of this prospectus. We will not
receive any of the proceeds from the sale by the selling stockholders of the
shares of common stock. We will bear all fees and expenses incident
to our obligation to register the shares of common stock.
The
selling stockholders may sell all or a portion of the shares of common stock
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents. If the
shares of common stock are sold through underwriters or broker-dealers, the
selling stockholders will be responsible for underwriting discounts or
commissions or agent's commissions. The shares of common stock may be
sold in one or more transactions at fixed prices, at prevailing market prices
at
the time of the sale, at varying prices determined at the time of sale, or
at
negotiated prices. These sales may be effected in transactions, which
may involve crosses or block transactions,
|
·
|
on
any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of
sale;
|
|
·
|
in
the over-the-counter market;
|
|
·
|
in
transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
|
|
·
|
through
the writing of options, whether such options are listed on an options
exchange or otherwise;
|
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
·
|
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
·
|
privately
negotiated transactions;
|
|
·
|
short
sales;
|
|
·
|
sales
pursuant to Rule 144;
|
|
·
|
broker-dealers
may agree with the selling securityholders to sell a specified number
of
such shares at a stipulated price per
share;
|
|
·
|
a
combination of any such methods of sale;
and
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
If
the
selling stockholders effect such transactions by selling shares of common stock
to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling stockholders or commissions from
purchasers of the shares of common stock for whom they may act as agent or
to
whom they may sell as principal (which discounts, concessions or commissions
as
to particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved). In connection with
sales of the shares of common stock or otherwise, the selling stockholders
may
enter into hedging transactions with broker-dealers, which may in turn engage
in
short sales of the shares of common stock in the course of hedging in positions
they assume. The selling stockholders may also sell shares of common
stock short and deliver shares of common stock covered by this prospectus to
close out short positions and to return borrowed shares in connection with
such
short sales. The selling stockholders may also loan or pledge shares
of common stock to broker-dealers that in turn may sell such
shares.
The
selling stockholders may pledge or grant a security interest in some or all
of
the warrants or shares of common stock owned by them and, if they default in
the
performance of their secured obligations, the pledgees or secured parties may
offer and sell the shares of common stock from time to time pursuant to this
prospectus or any amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act, amending, if necessary, the list
of
selling stockholders to include the pledgee, transferee or other successors
in
interest as selling stockholders under this prospectus. The selling
stockholders also may transfer and donate the shares of common stock in other
circumstances in which case the transferees, donees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.
The
selling stockholders and any broker-dealer participating in the distribution
of
the shares of common stock may be deemed to be "underwriters" within the meaning
of the Securities Act, and any commission paid, or any discounts or concessions
allowed to, any such broker-dealer may be deemed to be underwriting commissions
or discounts under the Securities Act. At the time a particular
offering of the shares of common stock is made, a prospectus supplement, if
required, will be distributed which will set forth the aggregate amount of
shares of common stock being offered and the terms of the offering, including
the name or names of any broker-dealers or agents, any discounts, commissions
and other terms constituting compensation from the selling stockholders and
any
discounts, commissions or concessions allowed or reallowed or paid to
broker-dealers.
Under
the
securities laws of some states, the shares of common stock may be sold in such
states only through registered or licensed brokers or dealers. In
addition, in some states the shares of common stock may not be sold unless
such
shares have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied
with.
There
can
be no assurance that any selling stockholder will sell any or all of the shares
of common stock registered pursuant to the registration statement, of which
this
prospectus forms a part.
The
selling stockholders and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of
1934,
as amended, and the rules and regulations thereunder, including, without
limitation, Regulation M of the Exchange Act, which may limit the timing of
purchases and sales of any of the shares of common stock by the selling
stockholders and any other participating person. Regulation M may
also restrict the ability of any person engaged in the distribution of the
shares of common stock to engage in market-making activities with respect to
the
shares of common stock. All of the foregoing may affect the
marketability of the shares of common stock and the ability of any person or
entity to engage in market-making activities with respect to the shares of
common stock.
We
will
pay all expenses of the registration of the shares of common stock pursuant
to
the registration rights agreement, estimated to be
$[ ] in total, including, without limitation,
Securities and Exchange Commission filing fees and expenses of compliance with
state securities or "blue sky" laws; provided, however, that a selling
stockholder will pay all underwriting discounts and selling commissions, if
any. We will indemnify the selling stockholders against liabilities,
including some liabilities under the Securities Act, in accordance with the
registration rights agreements, or the selling stockholders will be entitled
to
contribution. We may be indemnified by the selling stockholders
against civil liabilities, including liabilities under the Securities Act,
that
may arise from any written information furnished to us by the selling
stockholder specifically for use in this prospectus, in accordance with the
related registration rights agreements, or we may be entitled to
contribution.
Once
sold
under the registration statement, of which this prospectus forms a part, the
shares of common stock will be freely tradable in the hands of persons other
than our affiliates.
