Document:

ex4-2.htm

    Exhibit
      4.2

     

    NEITHER
      THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
      THE
      SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
      LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
      OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
      THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
      OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
      UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER
      SAID
      ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
      CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
      ARRANGEMENT SECURED BY THE SECURITIES.

     

    THIS
      WARRANT MAY NOT, IN ANY EVENT, BE TRANSFERRED TO ANY PERSON OR ENTITY THAT
      IS
      NOT AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(c) OF REGULATION
      D OF
      THE SECURITIES ACT OF 1933, AS AMENDED.

     

    

    Void
      after 5:00 p.m., Mountain time on September 3, 2012

    

    COMMON
      STOCK PURCHASE WARRANT

    

    OF

    

    AEROGROW
      INTERNATIONAL, INC.

    

     

    AEROGROW
      INTERNATIONAL, INC., a Nevada corporation (the “Company”), hereby certifies
      that, for value received, [____________] (the “Warrant Holder” and collectively
      with all other holders of Warrants issued pursuant to the Placement Agent
      Agreement defined below, the “Warrant Holders”) is the owner of this Warrant to
      purchase, at any time during the period commencing on the Commencement Date
      (as
      defined in Section 2.1) and ending on the Expiration Date (as
      defined Section 2.5), up to [____________] fully paid and
      non-assessable shares of common stock, par value $0.001 per share, of the
      Company (“Common Stock”) at a per share purchase price equal to the Exercise
      Price (as defined in Section 1.2) in lawful money of the United
      States of America.  This Warrant is issued under that certain
      Placement Agent Agreement, dated August 30, 2007, between the Company and
      Keating Securities, LLC (the "Placement Agent Agreement"), entered into in
      connection with the issuance of up to 800,000 Units, each Unit consisting of
      one
      share of Common Stock and a warrant to purchase one share of Common Stock,
      issued or to be issued by the Company as part of a certain private offering
      (“Offering”) pursuant a Securities Purchase Agreement dated August 31, 2007
      between the Buyers (as defined therein) and the Company (the “Securities
      Purchase Agreement”).  The warrants issued pursuant to the Placement
      Agent Agreement are referred to herein as the “Warrants”.

     

    1.  WARRANT;
      EXERCISE
      PRICE.

     

    1.1  Each
      share of Common Stock to which the
      Warrant Holder is entitled to purchase pursuant to this Warrant is referred
      to
      herein individually as a “Warrant Share” and severally, the “Warrant
      Shares.”

     

    1.2  The
      purchase price payable upon
      exercise (“Exercise Price”) shall be $8.25
      per share, subject to adjustment as
      provided in Section
      8. 

     

    2.  EXERCISE
      OF WARRANT; EXPIRATION
      DATE.

     

    2.1  Exercise
      of Warrant.

     

    (a) Exercise
      for Cash.  This Warrant is
      exercisable during the period commencing on September 4, 2007
      (“Commencement Date”) and ending on the Expiration Date, in whole, or from time
      to time, in part, at the option of the Warrant Holder, upon surrender of this
      Warrant to the Company, or such other person as the Company may designate,
      together with a duly completed and executed form of exercise attached hereto
      (indicating exercise by payment of the Exercise Price) and payment of an amount
      equal to the then applicable Exercise Price multiplied by the number of Warrant
      Shares then being purchased upon such exercise.  The payment of the
      Exercise Price shall be in cash or by certified check or official bank check,
      payable to the order of the Company.

     

    (b) Cashless
      Exercise.  In lieu of exercising
      the
      Warrant pursuant to Section 2.1(a), this Warrant may be exercised during any
      period commencing on the first anniversary of the closing of the Offering and
      ending on the Expiration Date during which a valid Company prospectus covering
      the public re-sale of the Warrant Shares is not available to the Warrant Holder,
      in whole, or from time to time, in part, at the option of the Warrant Holder,
      upon surrender of the Warrant to the Company, or such other person as the
      Company may designate, together with a duly completed and executed form of
      exercise attached hereto (indicating exercise by cashless exercise), specifying
      the number of shares to be purchased upon exercise.  The number of
      Warrant Shares to be issued to the Warrant Holder upon such cashless exercise
      shall be computed using the following formula:

     

    
      	
              X
                =
                (P)(Y)(A-B)/A

            
	
              Where

            	
              X
                =

            	
              the
                number of shares of Warrant Shares to be issued to the Warrant Holder
                for
                the Warrant being converted.

            
	
               

            	
               

            	
              P
                =

            	
              the
                number of shares of Common Stock being purchased on exercise expressed
                as
                a decimal fraction.

            
	
               

            	
               

            	
              Y
                =

            	
              the
                total number of Warrant Shares issuable upon exercise of the Warrant
                in
                full.

            
	
               

            	
               

            	
              A
                =

            	
              the
                fair market value of one Warrant Share which shall mean the "last
                sale
                price" as determined in accordance with Section 2.4.

            
	
               

            	
               

            	
              B
                =

            	
              the
                Exercise Price on the date of
                conversion.

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.2  Effectiveness.  Each
      exercise of a Warrant
      shall be deemed to have been effected immediately prior to the close of business
      on the day on which such Warrant shall have been surrendered to the Company
      as
      provided in Section
      2.1.  At
      such time, the person or persons in whose name or names any certificates for
      Warrant Shares shall be issuable upon such exercise as provided in Section 2.3
      below shall be deemed to have become
      the holder or holders of record of the Warrant Shares represented by such
      certificates.

     

    2.3  Issuance.  As
      soon as practicable
      after the exercise of this Warrant, in full or in part, the Company, at its
      expense, will use its best efforts to cause to be issued in the name of, and
      delivered to, the Warrant Holder, or, subject to the terms and conditions
      hereof, to such other individual or entity as such Warrant Holder may
      direct: 

     

    (a) a
      certificate or certificates for the
      number of full Warrant Shares to which such Warrant Holder shall be entitled
      upon such exercise plus, in lieu of any fractional share to which such Warrant
      Holder would otherwise be entitled, cash in an amount determined pursuant to
      Section
      2.4
      hereof,

     

    (b) in
      case such exercise is in part only,
      a new Warrant (dated the date hereof) of like tenor, stating on the face or
      faces thereof the number of shares currently stated on the face of this Warrant
      minus the number of such shares purchased by the Warrant Holder upon such
      exercise as provided in Section 2.1
      (prior to any adjustments made thereto
      pursuant to the provisions of this Warrant), and

     

    The
      Company shall not be required upon the exercise of this Warrant to issue any
      fractional shares, but shall round down to the next whole share.

     

    2.4  Price.  “Last
      sale price” means
      (i) if the Common Stock is listed on a national securities exchange or quoted
      on
      the Nasdaq National Market, Nasdaq Capital Markets or NASD OTC Bulletin Board
      (or successor such as the Bulletin Board Exchange), the closing bid price of
      the
      Common Stock in the principal trading market for the Common Stock as reported
      by
      the exchange, Nasdaq or the NASD, as the case may be, (ii) if the Common Stock
      is not listed on a national securities exchange or quoted on the Nasdaq National
      Market, Nasdaq SmallCap Market or the NASD OTC Bulletin Board (or successor
      such
      as the Bulletin Board Exchange), but is traded in the residual over-the-counter
      market, the closing bid price for the Common Stock on the last trading day
      preceding the date in question for which such quotations are reported by the
      Pink Sheets, LLC or similar publisher of such quotations, and (iii) if the
      fair
      market value of the Common Stock cannot be determined pursuant to clause (i)
      or
      (ii) above, such price as the Board of Directors of the Company shall determine,
      in good faith. 

     

    2.5  Expiration
      Date.  The term “Expiration Date” shall mean 5:00 p.m., Mountain
      time on September 3, 2012, or if such date shall in the State of Colorado
      be a holiday or a day on which banks are authorized to close, then 5:00 p.m.,
      Mountain time the next following day which in the State of Colorado is not
      a
      holiday or a day on which banks are authorized to close.

    

    3.  REGISTRATION
      AND TRANSFER ON COMPANY
      BOOKS.

     

    3.1  The
      Company (or an agent of the
      Company) will maintain a register containing the names and addresses of the
      Warrant Holders.  Any Warrant Holder may change its, his or her
      address as shown on the warrant register by written notice to the Company
      requesting such change.

     

    3.2  The
      Company shall register upon its
      books any transfer of a Warrant upon surrender of same as provided in
Section
      5.

     

    4.  RESERVATION
      OF
      SHARES. The Company
      will at all times reserve and keep available, solely for issuance and delivery
      upon the exercise of this Warrant, such Warrant Shares and other stock,
      securities and property, as from time to time shall be issuable upon the
      exercise of this Warrant.  The Company covenants that all shares of
      Warrant Shares so issuable when issued will be duly and validly issued and
      fully
      paid and non-assessable.

     

    5.  EXCHANGE,
      LOSS OR MUTILATION OF
      WARRANT. This Warrant
      is exchangeable, without expense, at the option of the Warrant Holder, upon
      presentation and surrender hereof to the Company for other warrants of different
      denominations entitling the holder thereof to purchase in the aggregate the
      same
      number of shares of Common Stock purchasable hereunder on the same terms and
      conditions as provided herein.  Subject to the provisions of
Section
      6, if applicable,
      this
      Warrant may be divided or combined with other warrants which carry the same
      rights upon presentation of such warrants at the Company’s office together with
      a written notice specifying the names and denominations in which new warrants
      are to be issued and signed by the Warrant Holder hereof.  The term
“Warrant” as used herein includes any warrants into which this Warrant may be
      divided or exchanged.  Upon receipt by the Company of reasonable
      evidence of the ownership and the loss, theft, destruction or mutilation of
      this
      Warrant and, in the case of loss, theft or destruction, receipt of indemnity
      reasonably satisfactory to the Company, or, in the case of mutilation, upon
      surrender and cancellation of the mutilated Warrant, the Company shall execute
      and deliver in lieu thereof a new Warrant of like tenor and date representing
      an
      equal number of shares of Common Stock. 

     

    6.  LIMITATION
      ON EXERCISE AND
      SALES.

     

    6.1  Each
      Warrant Holder acknowledges that
      the Warrants and the Warrant Shares have not been registered under the
      Securities Act of 1933, as amended (“the Securities Act”) and the rules and
      regulations thereunder, or any successor legislation, and agrees not to sell,
      pledge, distribute, offer for sale, transfer or otherwise dispose of any
      Warrant, or any Warrant Shares issued upon its exercise, in except in compliance
      with the requirements of Section 6.2.

     

    6.2  This
      Warrant and the rights granted to
      the Warrant Holder are transferable only to Accredited Investors (as defined
      in
      Section 502 of the Securities Act) in whole or in part, upon surrender of this
      Warrant, together with a properly executed assignment in the form attached
      hereto, at the office or to the agent of the Company; provided, however,
      that if at the
      time
      of the surrender of this Warrant in connection with any exercise, transfer
      or
      exchange of this Warrant, this Warrant (or, in the case of any exercise, the
      Warrant Shares issuable hereunder), shall not be registered for resale under
      the
      Securities Act or under applicable state securities or blue sky laws, then
      the
      Company may require, as a condition of allowing such exercise, transfer or
      exchange, (i) a written opinion of counsel, which opinion and counsel are
      acceptable to the Company, to the effect that such exercise, transfer or
      exchange may be made without registration under the Securities Act or under
      applicable state securities or blue sky laws, (ii) that any transferee of the
      Warrant execute and deliver to the Company a document containing investment
      representations and warranties substantially similar to those set forth in
      the
      Securities Purchase Agreement, and (iii) prior to exercise of the Warrant,
      the
      Warrant Holder shall have executed the form of exercise annexed
      hereto.

     

    6.3  Certificates
      delivered to the Warrant
      Holder upon exercise hereof shall be imprinted with a legend in substantially
      the following form if such Warrant Shares are not registered at the time of
      exercise:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
      LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
      OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
      THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
      OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
      UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER
      SAID
      ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
      CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
      ARRANGEMENT SECURED BY THE SECURITIES.

     

    THIS
      WARRANT MAY NOT, IN ANY EVENT, BE TRANSFERRED TO ANY PERSON OR ENTITY THAT
      IS
      NOT AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(c) OF
      REGULATION
      D OF THE SECURITIES ACT OF 1933, AS AMENDED.

     

     

    7.  REGISTRATION
      RIGHTS OF WARRANT
      HOLDER. The initial
      Warrant Holder (and certain permitted assignees thereof) is entitled to the
      benefit of registration rights in respect of Warrant Shares in accordance with
      and subject to the terms and conditions of the Registration Rights Agreement
      executed and delivered by the initial Warrant Holder and the
      Company.

     

    8.  ADJUSTMENT
      OF PURCHASE PRICE AND
      NUMBER OF SHARES DELIVERABLE. The Exercise Price
      and the number of
      Warrant Shares purchasable pursuant to each Warrant shall be subject to
      adjustment from time to time as hereinafter set forth in this Section 8: 

     

    (a)  If
      the Company shall (i) issue any
      shares of its Common Stock as a stock dividend or (ii) subdivide the number
      of
      outstanding shares of its Common Stock into a greater number of shares, the
      Exercise Price shall be proportionately reduced and the number of Warrant Shares
      at that time purchasable pursuant to this Warrant shall be proportionately
      increased.  If the Company shall reduce the number of outstanding
      shares of Common Stock by combining such shares into a smaller number of shares,
      the Exercise Price per Warrant Share shall be proportionately increased and
      the
      number of Warrant Shares at that time purchasable pursuant to this Warrant
      shall
      be proportionately decreased.  If the Company shall, at any time
      during the life of this Warrant, declare a dividend payable in cash on its
      Common Stock and shall at substantially the same time offer to its stockholders
      a right to purchase new Common Stock from the proceeds of such dividend or
      for
      an amount substantially equal to the dividend, for purposes of this Warrant,
      all
      Common Stock so issued shall be deemed to have been issued as a stock
      dividend.  Any dividend paid or distributed upon the Common Stock in
      stock of any other class of securities convertible into shares of Common Stock
      shall be treated as a dividend paid in Common Stock to the extent that shares
      of
      Common Stock are issuable upon conversion thereof.

     

    (b)  If
      the Company shall be recapitalized
      by reclassifying its outstanding Common Stock, (other than a change in par
      value
      or a subdivision or combination as provided in Section 8(a)),
      or the Company or a successor
      corporation shall consolidate or merge with or convey all or substantially
      all
      of its or of any successor corporation’s property and assets to any other
      corporation or corporations (any such other corporations being included within
      the meaning of the term “successor corporation” hereinbefore used), then, as a
      condition of such recapitalization, consolidation, merger or conveyance, lawful
      and adequate provision shall be made whereby the Warrant Holder shall thereafter
      have the right to receive upon the exercise hereof the kind and amount of shares
      of stock or other securities or property which such Warrant Holder would have
      been entitled to receive if, immediately prior to any such reorganization or
      reclassification, such Warrant Holder had held the number of shares of Common
      Stock which were then purchasable upon the exercise of this
      Warrant.  In any such case, appropriate adjustment shall be made in
      the application of the provisions set forth herein with respect to the rights
      and interest thereafter of the Warrant Holder such that the provisions set
      forth
      in this Section
      8 (including
      provisions with respect to adjustment of the Exercise Price and number of shares
      purchasable upon the exercise of this Warrant) shall thereafter be applicable,
      as nearly as may be in relation to any shares of stock or other securities
      or
      property thereafter deliverable upon the exercise of this
      Warrant.

     

    (c)  If
      the Company shall sell all or
      substantially all of its property or dissolve, liquidate, or wind up its
      affairs, lawful provision shall be made as part of the terms of any such sale,
      dissolution, liquidation or winding up, so that the holder of this Warrant
      may
      thereafter receive upon exercise hereof in lieu of each Warrant Share that
      it
      would have been entitled to receive, the same kind and amount of any securities
      or assets as may be issuable, distributable or payable upon any such sale,
      dissolution, liquidation or winding up with respect to each share of Common
      Stock of the Company, provided, however,
      that in any case of any such sale or
      of dissolution, liquidation or winding up, the right to exercise this Warrant
      shall terminate on a date fixed by the Company; such date so fixed to be not
      earlier than 5:00 p.m., Mountain time, on the 45th day next succeeding the
      date
      on which notice of such termination of the right to exercise this Warrant has
      been given by mail to the registered holder of this Warrant at its address
      as it
      appears on the books of the Company.

     

    (d)  No
      adjustment in the per share Exercise
      Price shall be required unless such adjustment would require an increase or
      decrease in the Exercise Price by at least $0.01; provided, however,
      that any adjustments that by reason
      of this subsection are not required to be made shall be carried forward and
      taken into account in any subsequent adjustment. All calculations under this
      Section
      8 shall be made to
      the
      nearest cent or to the nearest 1/100th
      of a share, as the case may
      be.

     

    (e) The
      Company will not, by amendment of
      its Certificate of Incorporation or through any reorganization, transfer of
      assets, consolidation, merger, dissolution, issue or sale of securities or
      any
      other voluntary action, avoid or seek to avoid the observance or performance
      of
      any of the terms to be observed or performed hereunder by the Company but will
      at all times in good faith assist in the carrying out of all the provisions
      of
      this Section
      8 and in the taking
      of
      all such actions as may be necessary or appropriate in order to protect against
      impairment of the rights of the Warrant Holder to adjustments in the Exercise
      Price.

     

    (f) Upon
      the happening of any event
      requiring an adjustment of the Exercise Price hereunder, the Company shall
      give
      written notice thereof to the Warrant Holder stating the adjusted Exercise
      Price
      and the adjusted number of Warrant Shares resulting from such event and setting
      forth in reasonable detail the method of calculation and the facts upon which
      such calculation is based.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    9.  VOLUNTARY
      ADJUSTMENT BY THE
      COMPANY. The Company
      may, at its option, at any time during the term of this Warrant, reduce the
      then
      current Exercise Price to any amount deemed appropriate by the Board of
      Directors of the Company and/or extend the date of the expiration of this
      Warrant.

     

    10.  RIGHTS
      OF THE HOLDER.  The Warrant Holder
      shall
      not, by virtue hereof, be entitled to any rights of a stockholder in the
      Company, either at law or equity, and the rights of the Warrant Holder are
      limited to those expressed in this Warrant and are not enforceable against
      the
      Company except to the extent set forth herein.

     

    11.  NOTICES
      OF RECORD
      DATE.  In
      case: (a) the Company shall take a record of the holders of its Common Stock
      (or
      other stock or securities at the time deliverable upon the exercise of this
      Warrant) for the purpose of entitling or enabling them to receive any dividend
      or other distribution, or to receive any right to subscribe for or purchase
      any
      shares of any class or any other securities, or to receive any other right,
      or
      (b) of any capital reorganization of the Company, any reclassification of the
      capital stock of the Company, any consolidation or merger of the Company with
      or
      into another corporation (other than a consolidation or merger in which the
      Company is the surviving entity), or any transfer of all or substantially all
      of
      the assets of the Company, or (c) of the voluntary or involuntary dissolution,
      liquidation or winding-up of the Company, then, and in each such case, the
      Company will mail or cause to be mailed to the Warrant Holder a notice
      specifying, as the case may be: (i) the date on which a record is to be taken
      for the purpose of such dividend, distribution or right, and stating the amount
      and character of such dividend, distribution or right, or (ii) the effective
      date on which such reorganization, reclassification, consolidation, merger,
      transfer, dissolution, liquidation or winding-up is to take place, and the
      time,
      if any is to be fixed, as of which the holders of record of Common Stock (or
      such other stock or securities at the time deliverable upon the exercise of
      this
      Warrant) shall be entitled to exchange their shares of Common Stock (or such
      other stock or securities) for securities or other property deliverable upon
      such reorganization, reclassification, consolidation, merger, transfer,
      dissolution, liquidation or winding-up.  Such notice shall be mailed
      at least 20 days prior to the record date or effective date for the event
      specified in such notice, provided that the failure to mail such notice shall
      not affect the legality or validity of any such action.

     

    12.  SUCCESSORS.  The
      rights and obligations
      of the parties to this Warrant will inure to the benefit of and be binding
      upon
      the parties hereto and their respective permitted heirs, successors, assigns,
      pledgees, transferees and purchasers.

     

    13.  CHANGE
      OR WAIVER.  Any term of this
      Warrant
      may be changed or waived only by an instrument in writing signed by the party
      against whom enforcement of the change or waiver is sought.

     

    14.  HEADINGS.  The
      headings in this
      Warrant are for purposes of reference only and shall not limit or otherwise
      affect the meaning of any provision of this Warrant.

     

    15.  GOVERNING
      LAW.  This
      Warrant 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.

     

    16.  JURISDICTION
      AND
      VENUE.  The
      Company and the Warrant Holder (i) agree that any legal suit, action or
      proceeding arising out of or relating to this Warrant 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 the Company 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 18.

     

    17.  AMENDMENT
      AND WAIVER.  Any amendment or
      waiver of
      any of the terms or conditions of the Warrants by the Company must be in writing
      and must be duly executed by the Company or on its behalf.  Any of the
      terms or conditions of the Warrants may be amended or waived by the Warrant
      Holders only upon the written consent of Warrant Holders representing 51% of
      the
      Warrants then outstanding.  Any such amendment or waiver shall be
      binding on all Warrant Holders whether they consented or not or whether their
      consent was solicited or not.  The failure of a party to exercise any
      of its rights hereunder or to insist upon strict adherence to any term or
      condition hereof on any one occasion shall not be construed as a waiver or
      deprive that party of the right thereafter to insist upon strict adherence
      to
      the terms and conditions of this Warrant at a later date.  Further, no
      waiver of any of the terms and conditions of this Warrant shall be deemed to
      or
      shall constitute a waiver of any other term of condition hereof (whether or
      not
      similar).

     

    18.  MAILING
      OF NOTICES,
      ETC. All notices and
      other communications under this Warrant (except payment) shall be in writing
      and
      shall be sufficiently given if delivered to the addressees in person, by Federal
      Express or similar overnight courier service, or if mailed, postage prepaid,
      by
      certified mail, return receipt requested, as follows:

     

    
      	 	
              Registered
                Holder

            	
              :

            	
              To
                his or her last known address as indicated on the Company’s books and
                records.

            

    

    

    
      	 	
              The
                Company

            	
              :

            	
              To
                the Company’s Chief Executive Officer at the address of the Company’s
                principal office as set forth in the last filing by the Company with
                the
                Securities and Exchange Commission

            

    

     

    or
      to
      such other address as any of them, by notice to the others, may designate from
      time to time.  Notice shall be deemed given (a) when personally
      delivered, (b) on the scheduled delivery date if sent by Federal Express or
      other overnight courier service or (c) the fifth day after sent by certified
      mail.

     

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
      authorized officer as of the ______ day of September, 2007.

     

    

     

    AEROGROW
      INTERNATIONAL, INC.

    

    

    

    By:  _____________________________

    Michael
      Bissonnette, CEO

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    Notice
      of Exercise

    To
      be
      Executed by the Warrant Holder

    in
      Order
      to Exercise Warrant

     

    The
      undersigned Warrant Holder hereby irrevocably elects to exercise the attached
      Warrant for ______ shares of Common Stock represented by this Warrant
      by:

    

    (check
      one)

     ̈
      payment of the Exercise
      Price in cash pursuant to Section 2.1(a) of the Warrant

     ̈
      the cashless exercise
      option pursuant to Section 2.1(b) of the Warrant

     

    for
      the
      shares of Common Stock issuable upon the exercise of such Warrant, and requests
      that certificates for such shares of Common Stock shall be issued in the name
      of

     

    PLEASE
      INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER:

     

     

    __________________________________________________________

    

     

    _____________________________________________________________________________________________

     

     

    _____________________________________________________________________________________________

    (Please
      print or type name and address)

    and
      be
      delivered to

     

    _____________________________________________________________________________________________

     

     

    _____________________________________________________________________________________________

    (Please
      print or type name and address)

    

    and
      if
      such number of shares of Common stock shall not be all the shares of Common
      Stock into which this Warrant may be exercised, that a new Warrant for the
      balance of such shares of Common Stock be registered in the name of, and
      delivered to, the registered Warrant Holder at the address stated
      above.

     

    The
      undersigned hereby represents and warrants to the Company that it is an
“Accredited Investor” within the meaning of Rule 501(c) of Regulation D of the
      Securities Act of 1933, as amended (the “Securities Act”), and is acquiring
      these securities for its own account and not with a view to, or for sale in
      connection with, any distribution thereof, nor with any present intention of
      distributing or selling the same provided, however, the undersigned may sell
      such securities in accordance with federal and state securities
      laws.  The undersigned further represents that it does not have any
      contract, agreement, understanding or arrangement with any person to sell,
      transfer or grant the shares of Common Stock issuable under this Warrant. The
      undersigned understands that the shares it will be receiving are “restricted
      securities” under federal securities laws inasmuch as they are being acquired
      from AEROGROW INTERNATIONAL, INC., in transactions not including any public
      offering and that under such laws, such shares may only be sold pursuant to
      an
      effective and current registration statement under the Securities Act or an
      exemption from the registration requirements of the Securities Act and any
      other
      applicable restrictions including the requirements of state securities and
“blue
      sky” laws, in which event a legend or legends will be placed upon the
      certificate(s) representing the Common Stock issuable under this Warrant
      denoting such restrictions. The undersigned understands and acknowledges that
      the Company will rely on the accuracy of these representations and warranties
      in
      issuing the securities underlying the Warrant.

     

    
      	
              Dated:
                _______________

            	
              __________________________________________

              (Signature
                of Registered Holder)

            

    

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    ASSIGNMENT
      FORM

    To
      be
      executed by the Warrant Holder

    in
      order
      to Assign Warrants

    

    FOR
      VALUE
      RECEIVED,____________________________________ hereby sell, assigns and transfer
      unto

     

    PLEASE
      INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER

     

    __________________________________________________

     

     

    _____________________________________________________________________________________________

     

     

    _____________________________________________________________________________________________

     

     

    _____________________________________________________________________________________________

    (Please
      print or type name and address)

    

     

    ______________________
      of the shares of Common Stock into which this Warrant is exercisable, and hereby
      irrevocably constitutes and appoints ________________________ Attorney to
      transfer this Warrant on the books of the Company, with full power of
      substitution in the premises.

     

     

    
      	
              Dated:
                _______________

            	
              __________________________________________

              (Signature
                of Registered Holder)

            

    

     

     

    
       

    

    CERTIFICATION
      OF STATUS OF TRANSFEREE

    TO
      BE EXECUTED BY THE TRANSFEREE OF THIS WARRANT

    

    The
      undersigned transferee hereby certifies to the registered holder of this Warrant
      and to AEROGROW INTERNATIONAL, INC. that the transferee is an “Accredited
      Investor” within the meaning of Rule 501 of Regulation D of the Securities Act
      of 1933, as amended.

     

    
      	
              Dated:
                _______________

            	
              __________________________________________

              (Signature
                of Transferee)ex10-1.htm

     

    Exhibit
      10.1

     

    REGISTRATION
      RIGHTS AGREEMENT

    

    This
      Registration Rights Agreement
      (this “Agreement”) is made and entered into as of September 4, 2007,
      between Aerogrow International, Inc., a Nevada corporation (the
“Company”) and each of the several purchasers signatory hereto (each such
      purchaser, a “Purchaser” and, collectively, the
“Purchasers”).

    

                   This
      Agreement is made pursuant to the Securities Purchase Agreement, dated as of
      the
      date hereof, between the Company and each Purchaser (the “Purchase
      Agreement”).

    

                   The
      Company and each Purchaser hereby agrees as follows:

    

            1.                      Definitions

    

                   Capitalized
      terms used and not otherwise defined herein that are defined in the Purchase
      Agreement shall have the meanings given such terms in the Purchase
      Agreement. As used in this Agreement, the following terms shall have
      the following meanings:

    

                “Advice”
      shall have the meaning set forth in Section 6(d).

    

    “Effectiveness
      Date” means, with respect to the Initial Registration Statement required to
      be filed hereunder, the 90th calendar
      day
      following the date hereof (or, in the event of a “full review” by the
      Commission, the 120th calendar
      day
      following the date hereof) and with respect to any additional Registration
      Statements which may be required pursuant to Section 3(c), the 90th calendar
      day
      following the date on which an additional Registration Statement is required
      to
      be filed hereunder; provided, however, that in the event the
      Company is notified by the Commission that one or more of the above Registration
      Statements will not be reviewed or is no longer subject to further review and
      comments, the Effectiveness Date as to such Registration Statement shall be
      the
      fifth Trading Day following the date on which the Company is so notified if
      such
      date precedes the dates otherwise required above.  In the event that,
      after the Closing Date and before a Registration Statement is declared
      effective, the offices of the Commission are closed due to acts of God, war
      or
      terror, the Effectiveness Date will be extended by a number of days equal to
      the
      days of any such closure.

    

    “Effectiveness
      Period” shall have the meaning set forth in Section 2(a).

    

    “Event”
      shall have the meaning set forth in Section 2(b).

    

    “Event
      Date” shall have the meaning set forth in Section 2(b).

    

    “Filing
      Date” means, with respect to the Initial Registration Statement required
      hereunder, the 30th calendar
      day
      following the date hereof and, with respect to any additional Registration
      Statements which may be required pursuant to Section 3(c), the earliest
      practical date on which the Company is permitted by SEC Guidance to file such
      additional Registration Statement related to the Registrable
      Securities.

    

    “Holder”
      or “Holders” means the holder or holders, as the case may be, from time
      to time of Registrable Securities.

    

    “Indemnified
      Party” shall have the meaning set forth in Section 5(c).

    

    “Indemnifying
      Party” shall have the meaning set forth in Section 5(c).

    

    “Initial
      Registration Statement” means the initial Registration Statement filed
      pursuant to this Agreement.

    

    “Initial
      Shares” means a number of Registrable Securities equal to the lesser of (i)
      the total number of Registrable Securities and (ii) one-third of the number
      of
      issued and outstanding shares of Common Stock that are held by non-affiliates
      of
      the Company on the day immediately prior to the filing date of the Initial
      Registration Statement.

    

    “Losses”
      shall have the meaning set forth in Section 5(a).

    

    “Plan
      of Distribution” shall have the meaning set forth in Section
      2(a).

    

    “Prospectus”
      means the prospectus included in a Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated by the Commission pursuant to the Securities Act), as
      amended or supplemented by any prospectus supplement, with respect to the terms
      of the offering of any portion of the Registrable Securities covered by a
      Registration Statement, and all other amendments and supplements to the
      Prospectus, including post-effective amendments, and all material incorporated
      by reference or deemed to be incorporated by reference in such
      Prospectus.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    “Registrable
      Securities” means (i) all Shares, (ii) all Warrant Shares (assuming on the
      date of determination the Warrants are exercised in full without regard to
      any
      exercise limitations therein), (iii) any additional shares of Common Stock
      issuable in connection with any anti-dilution provisions in the Warrants
      (without giving effect to any limitations on exercise set forth in the Warrant)
      and (iv) any securities issued or issuable upon any stock split, dividend or
      other distribution,  recapitalization or similar event with respect to
      the foregoing.

    

    “Registration
      Statement” means the registration statement required to be filed hereunder
      and any additional registration statements contemplated by Section 3(c),
      including (in each case) the Prospectus, amendments and supplements to such
      registration statement or Prospectus, including pre- and post-effective
      amendments, all exhibits thereto, and all material incorporated by reference
      or
      deemed to be incorporated by reference in such registration
      statement.

    

     “Rule
      415” means Rule 415 promulgated by the Commission pursuant to the Securities
      Act, as such Rule may be amended or interpreted from time to time, or any
      similar rule or regulation hereafter adopted by the Commission having
      substantially the same purpose and effect as such Rule.

    

    “Rule
      424” means Rule 424 promulgated by the Commission pursuant to the Securities
      Act, as such Rule may be amended or interpreted from time to time, or any
      similar rule or regulation hereafter adopted by the Commission having
      substantially the same purpose and effect as such Rule.

    

    “Selling
      Shareholder Questionnaire” shall have the meaning set forth in Section
      3(a).

    

    “SEC
      Guidance” means (i) any publicly-available written or oral guidance,
      comments, requirements or requests of the Commission staff and (ii) the
      Securities Act.

    

            2.                      Shelf
      Registration

    

    (a)  On
      or
      prior to each Filing Date, the Company shall prepare and file with the
      Commission a Registration Statement covering the resale of all or such maximum
      portion of the Registrable Securities as permitted by SEC Guidance (provided
      that the Company shall use commercially reasonable efforts to advocate with
      the
      Commission for the registration of all of the Registrable Securities in
      accordance with the SEC Guidance, including without limitation, the Manual
      of
      Publicly Available Telephone Interpretations D.29) that are not then registered
      on an effective Registration Statement for an offering to be made on a
      continuous basis pursuant to Rule 415.  The Registration Statement
      shall be on Form S-3 (except if the Company is not then eligible to register
      for
      resale the Registrable Securities on Form S-3, in which case such registration
      shall be on another appropriate form in accordance herewith) and shall contain
      (unless otherwise directed by at least an 85% majority in interest of the
      Holders) substantially the “Plan of Distribution” attached hereto as
Annex A.  Subject to the terms of this Agreement, the Company
      shall use its commercially reasonable efforts to cause a Registration Statement
      to be declared effective under the Securities Act as promptly as possible after
      the filing thereof, but in any event prior to the applicable Effectiveness
      Date,
      and shall use its commercially reasonable efforts to keep such Registration
      Statement continuously effective under the Securities Act until all Registrable
      Securities (other than any held by Holders that are Affiliates of the Company)
      covered by such Registration Statement have been sold, or may be sold without
      volume restrictions pursuant to Rule 144(k) (assuming any Warrants then
      outstanding are exercised pursuant to the cashless exercise provisions thereof),
      as determined by the counsel to the Company pursuant to a written opinion letter
      to such effect, addressed and acceptable to the Transfer Agent and the affected
      Holders (the “Effectiveness Period”).  The Company shall
      telephonically request effectiveness of a Registration Statement as of 5:00
      p.m.
      New York City time on a Trading Day.   The Company shall
      immediately notify the Holders via facsimile or by e-mail of the effectiveness
      of a Registration Statement on the same Trading Day that the Company
      telephonically confirms effectiveness with the Commission, which shall be the
      date requested for effectiveness of such Registration Statement.  The
      Company shall, by 9:30 a.m. New York City time on the Trading Day after the
      effective date of such Registration Statement, file a final Prospectus with
      the
      Commission as required by Rule 424.  Failure to so notify the Holder
      within 1 Trading Day of such notification of effectiveness or failure to file
      a
      final Prospectus as foresaid shall be deemed an Event under Section
      2(b).  Notwithstanding any other provision of this Agreement and
      subject to the payment of liquidated damages pursuant to Section 2(b), if any
      SEC Guidance sets forth a limitation on the number of Registrable Securities
      permitted to be registered on a particular Registration Statement (and
      notwithstanding that the Company used commercially reasonable efforts to
      advocate with the Commission for the registration of all or a greater portion
      of
      Registrable Securities), unless otherwise directed in writing by a Holder as
      to
      its Registrable Securities, the number of Registrable Securities to be
      registered on such Registration Statement will first be reduced by Registrable
      Securities represented by Warrant Shares (applied, in the case that some Warrant
      Shares may be registered, to the Holders on a pro rata basis based on the total
      number of unregistered Warrant Shares held by such Holders), and second by
      Registrable Securities represented by the Shares (applied, in the case that
      some
      Conversion Shares may be registered, to the Holders on a pro rata basis based
      on
      the total number of unregistered Shares held by such
      Holders) .

    

    (b)  If:
      (i)
      the Initial Registration Statement is not filed on or prior to its Filing Date
      (if the Company files the Initial Registration Statement without affording
      the
      Holders the opportunity to review and comment on the same as required by Section
      3(a) herein, the Company shall be deemed to have not satisfied this clause
      (i)),
      or (ii) the Company fails to file with the Commission a request for acceleration
      of a Registration Statement in accordance with Rule 461 promulgated by the
      Commission pursuant to the Securities Act, within five Trading Days of the
      date
      that the Company is notified (orally or in writing, whichever is earlier) by
      the
      Commission that such Registration Statement will not be “reviewed” or will not
      be subject to further review, or (iii) as to, in the aggregate among all Holders
      on a pro-rata basis based on their purchase of the Securities pursuant to the
      Purchase Agreement, a Registration Statement registering for resale all of
      the
      Initial Shares is not declared effective by the Commission by the Effectiveness
      Date of the Initial Registration Statement, or (iv) all of the Registrable
      Securities are not registered for resale pursuant to one or more effective
      Registration Statements on or before March 31, 2008 or (v) after the effective
      date of a Registration Statement, such Registration Statement ceases for any
      reason to remain continuously effective as to all Registrable Securities
      included in such Registration Statement, or the Holders are otherwise not
      permitted to utilize the Prospectus therein to resell such Registrable
      Securities (a)  because the Company is negotiating a merger,
      consolidation, acquisition or sale of all or substantially all of its assets
      or
      a similar transaction which, in the good faith judgment of the Company’s board
      of directors, requires the Registration Statement to be amended to include
      information in connection with such pending transaction (including the parties
      thereto) and such information is not yet available or publicly disclosable,
      for
      more than an aggregate of 30 calendar days (which need not be consecutive days)
      during any 12-month period or (b) for any other reason, more than an aggregate
      of 60 calendar days (which need not be consecutive days) during any 12-month
      period (any such failure or breach being referred to as an “Event”, and
      for purposes of clause (i), (iii) and (iv) the date on which such Event occurs,
      and for purpose of clause (ii) the date on which such five Trading Day period
      is
      exceeded, and for purpose of clause (v) the date on which such 30 or 60 calendar
      day period, as applicable, is exceeded being referred to as “Event
      Date”), then, in addition to any other rights the Holders may have hereunder
      or under applicable law, on each such Event Date and on each monthly anniversary
      of each such Event Date (if the applicable Event shall not have been cured
      by
      such date) until the applicable Event is cured, the Company shall pay to each
      Holder an amount in cash, as partial liquidated damages and not as a penalty,
      equal to 1% of the aggregate purchase price paid by such Holder pursuant to
      the
      Purchase Agreement for any unregistered Registrable Securities then held by
      such
      Holder.  The parties agree that the Company shall not be liable for
      liquidated damages under this Agreement with respect to any Warrants or Warrant
      Shares.  If the Company fails to pay any partial liquidated damages
      pursuant to this Section in full within seven days after the date payable,
      the
      Company will pay interest thereon at a rate of 18% per annum (or such lesser
      maximum amount that is permitted to be paid by applicable law) to the Holder,
      accruing daily from the date such partial liquidated damages are due until
      such
      amounts, plus all such interest thereon, are paid in full. The partial
      liquidated damages pursuant to the terms hereof shall apply on a daily pro
      rata
      basis for any portion of a month prior to the cure of an Event.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.           Registration
      Procedures.

    

                   In
      connection with the Company’s registration obligations hereunder, the Company
      shall:

    

    (a)  Not
      less
      than 5 Trading Days prior to the filing of each Registration Statement and
      not
      less than one Trading Day prior to the filing of any related Prospectus or
      any
      amendment or supplement thereto , the Company shall (i) furnish to each Holder
      copies of all such documents proposed to be filed, which documents (other than
      those incorporated or deemed to be incorporated by reference) will be subject
      to
      the review of such Holders and (ii) cause its officers and directors, counsel
      and independent certified public accountants to respond to such inquiries as
      shall be necessary, in the reasonable opinion of respective counsel to each
      Holder, to conduct a reasonable investigation within the meaning of the
      Securities Act. The Company will consider in good faith any comments or
      objections to a Registration Statement or any such Prospectus or any amendments
      or supplements thereto made in good faith by the Holders, provided that the
      Company is notified of such objection in writing no later than 5 Trading Days
      after the Holders have been so furnished copies of a Registration Statement
      or 1
      Trading Day after the Holders have been so furnished copies of any related
      Prospectus or amendments or supplements thereto. Each Holder agrees to furnish
      to the Company a completed questionnaire in the form attached to this Agreement
      as Annex B (a “Selling Shareholder Questionnaire”) not less than
      three Trading Days prior to the Filing Date or by the end of the fourth Trading
      Day following the date on which such Holder receives draft materials in
      accordance with this Section.

    

    (b)  (i)
      Prepare and file with the Commission such amendments, including post-effective
      amendments, to a Registration Statement and the Prospectus used in connection
      therewith as may be necessary to keep a Registration Statement continuously
      effective as to the applicable Registrable Securities for the Effectiveness
      Period and prepare and file with the Commission such additional Registration
      Statements in order to register for resale under the Securities Act all of
      the
      Registrable Securities; (ii) cause the related Prospectus to be amended or
      supplemented by any required Prospectus supplement (subject to the terms of
      this
      Agreement), and, as so supplemented or amended, to be filed pursuant to Rule
      424; (iii) respond as promptly as reasonably possible to any comments received
      from the Commission with respect to a Registration Statement or any amendment
      thereto and provide as promptly as reasonably possible to the Holders true
      and
      complete copies of all correspondence from and to the Commission relating to
      a
      Registration Statement (provided that the Company may excise any information
      contained therein which would constitute material non-public information as
      to
      any Holder which has not executed a confidentiality agreement with the Company);
      and (iv) comply in all material respects with the provisions of the Securities
      Act and the Exchange Act with respect to the disposition of all Registrable
      Securities covered by a Registration Statement during the applicable period
      in
      accordance (subject to the terms of this Agreement) with the intended methods
      of
      disposition by the Holders thereof set forth in such Registration Statement
      as
      so amended or in such Prospectus as so supplemented.

    

    (c)  If
      during
      the Effectiveness Period, the number of Registrable Securities at any time
      exceeds 100% of the number of shares of Common Stock then registered in a
      Registration Statement, then the Company shall file as soon as reasonably
      practicable, but in any case prior to the applicable Filing Date, an additional
      Registration Statement covering the resale by the Holders of not less than
      the
      number of such Registrable Securities.

    

    (d)  Notify
      the Holders of Registrable Securities to be sold (which notice shall, pursuant
      to clauses (iii) through (vi) hereof, be accompanied by an instruction to
      suspend the use of the Prospectus until the requisite changes have been made)
      as
      promptly as reasonably possible (and, in the case of (i)(A) below, not less
      than
      one Trading Day prior to such filing) and (if requested by any such Person)
      confirm such notice in writing no later than one Trading Day following the
      day
      (i)(A) when a Prospectus or any Prospectus supplement or post-effective
      amendment to a Registration Statement is proposed to be filed; (B) when the
      Commission notifies the Company whether there will be a “review” of such
      Registration Statement and whenever the Commission comments in writing on such
      Registration Statement; and (C) with respect to a Registration Statement or
      any
      post-effective amendment, when the same has become effective; (ii) of any
      request by the Commission or any other federal or state governmental authority
      for amendments or supplements to a Registration Statement or Prospectus or
      for
      additional information; (iii) of the issuance by the Commission or any other
      federal or state governmental authority of any stop order suspending the
      effectiveness of a Registration Statement covering any or all of the Registrable
      Securities or the initiation of any Proceedings for that purpose; (iv) of the
      receipt by the Company of any notification with respect to the suspension of
      the
      qualification or exemption from qualification of any of the Registrable
      Securities for sale in any jurisdiction, or the initiation or threatening of
      any
      Proceeding for such purpose; (v) of the occurrence of any event or passage
      of
      time that makes the financial statements included in a Registration Statement
      ineligible for inclusion therein or any statement made in a Registration
      Statement or Prospectus or any document incorporated or deemed to be
      incorporated therein by reference untrue in any material respect or that
      requires any revisions to a Registration Statement, Prospectus or other
      documents so that, in the case of a Registration Statement or the Prospectus,
      as
      the case may be, it will not contain any untrue statement of a material fact
      or
      omit to state any 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; and (vi) of the occurrence or existence of any pending
      corporate development with respect to the Company that the Company believes
      may
      be material and that, in the determination of the Company, makes it not in the
      best interest of the Company to allow continued availability of a Registration
      Statement or Prospectus, provided that any and all of such information shall
      remain confidential to each Holder until such information otherwise becomes
      public, unless disclosure by a Holder is required by law; provided,
further, that notwithstanding each Holder’s agreement to keep such
      information confidential, each such Holder makes no acknowledgement that any
      such information is material, non-public information.

    

    (e)  Use
      its
      commercially reasonable efforts to avoid the issuance of, or, if issued, obtain
      the withdrawal of (i) any order stopping or suspending the effectiveness of
      a
      Registration Statement, or (ii) any suspension of the qualification (or
      exemption from qualification) of any of the Registrable Securities for sale
      in
      any jurisdiction, at the earliest practicable moment.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (f)  Furnish
      to each Holder, without charge, at least one conformed copy of each such
      Registration Statement and each amendment thereto, including financial
      statements and schedules, all documents incorporated or deemed to be
      incorporated therein by reference to the extent requested by such Person, and
      all exhibits to the extent requested by such Person (including those previously
      furnished or incorporated by reference) promptly after the filing of such
      documents with the Commission; provided, that any such item which is available
      on the EDGAR system need not be furnished in physical form.

    

    (g)  Subject
      to the terms of this Agreement, the Company hereby consents to the use of such
      Prospectus and each amendment or supplement thereto by each of the selling
      Holders in connection with the offering and sale of the Registrable Securities
      covered by such Prospectus and any amendment or supplement thereto, except
      after
      the giving of any notice pursuant to Section 3(d).

    

    (h)   The
      Company shall cooperate with any broker-dealer through which a Holder proposes
      to resell its Registrable Securities in effecting a filing with the NASD
      Regulation, Inc. Corporate Financing Department pursuant to NASD Rule 2710,
      as
      requested by any such Holder, and the Company shall pay the filing fee required
      by such filing within 2 Business Days of request therefor.

    

    (i)  Prior
      to
      any resale of Registrable Securities by a Holder, use its commercially
      reasonable efforts to register or qualify or cooperate with the selling Holders
      in connection with the registration or qualification (or exemption from the
      Registration or qualification) of such Registrable Securities for the resale
      by
      the Holder under the securities or Blue Sky laws of such jurisdictions within
      the United States as any Holder reasonably requests in writing, to keep each
      registration or qualification (or exemption therefrom) effective during the
      Effectiveness Period and to do any and all other acts or things reasonably
      necessary to enable the disposition in such jurisdictions of the Registrable
      Securities covered by each Registration Statement; provided, that the Company
      shall not be required to qualify generally to do business in any jurisdiction
      where it is not then so qualified, subject the Company to any material tax
      in
      any such jurisdiction where it is not then so subject or file a general consent
      to service of process in any such jurisdiction.

    

    (j)  If
      requested by a Holder, cooperate with such Holders to facilitate the timely
      preparation and delivery of certificates representing Registrable Securities
      to
      be delivered to a transferee pursuant to a Registration Statement, which
      certificates shall be free, to the extent permitted under applicable law and
      by
      the Purchase Agreement, of all restrictive legends, and to enable such
      Registrable Securities to be in such denominations and registered in such names
      as any such Holder may request.

    

    (k)  Upon
      the
      occurrence of any event contemplated by Section 3(d), as promptly as reasonably
      possible under the circumstances taking into account the Company’s good faith
      assessment of any adverse consequences to the Company and its stockholders
      of
      the premature disclosure of such event, prepare a supplement or amendment,
      including a post-effective amendment, to a Registration Statement or a
      supplement to the related Prospectus or any document incorporated or deemed
      to
      be incorporated therein by reference, and file any other required document
      so
      that, as thereafter delivered, neither a Registration Statement nor such
      Prospectus will contain an 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 light of the circumstances under which they were made,
      not misleading. If the Company notifies the Holders in accordance with
      clauses (iii) through (vi) of Section 3(d) above to suspend the use of any
      Prospectus until the requisite changes to such Prospectus have been made, then
      the Holders shall suspend use of such Prospectus.  The Company will
      use its commercially reasonable efforts to ensure that the use of the Prospectus
      may be resumed as promptly as is practicable.  The Company shall be
      entitled to exercise its right under this Section 3(k) to suspend the
      availability of a Registration Statement and Prospectus, subject to the payment
      of partial liquidated damages otherwise required pursuant to Section 2(b),
      for a
      period not to exceed 60 calendar days (which need not be consecutive days)
      in
      any 12 month period.

    

    (l)  Comply
      with all applicable rules and regulations of the Commission.

    

    (m)  The
      Company may require each selling Holder to furnish to the Company a certified
      statement as to the number of shares of Common Stock beneficially owned by
      such
      Holder and, if required by the Commission, the natural persons thereof that
      have
      voting and dispositive control over the shares. During any periods that the
      Company is unable to meet its obligations hereunder with respect to the
      registration of the Registrable Securities solely because any Holder fails
      to
      furnish such information within three Trading Days of the Company’s request, or
      fails to deliver the Selling Shareholder Questionnaire within the time periods
      required hereunder, any liquidated damages that are accruing at such time as
      to
      such Holder only shall be tolled and any Event that may otherwise occur solely
      because of such delay shall be suspended as to such Holder only, until such
      information is delivered to the Company.

    

    (n)  Each
      Holder shall notify the Company in the event that any information supplied
      by
      such Holder in writing for inclusion in a Registration Statement or related
      prospectus or amendment or supplement is materially untrue or omits to state
      a
      material fact required to be stated therein or necessary to make such
      information not misleading in light of the circumstances then existing;
      immediately discontinue any sale or other disposition of such Registrable
      Securities pursuant to such Registration Statement until the filing of an
      amendment or supplement to such prospectus as may be necessary so that such
      prospectus does not contain an untrue statement of material fact or omit to
      state a material fact required to be stated therein or necessary to make the
      statements therein not misleading in light of the circumstances then existing;
      and use reasonable efforts to assist the Company as may be appropriate to make
      such amendment or supplement effective for such purpose.

    
 

     4.                      Registration
      Expenses. All fees and expenses incident to the performance of or compliance
      with this Agreement by the Company shall be borne by the Company whether or
      not
      any Registrable Securities are sold pursuant to a Registration Statement. The
      fees and expenses referred to in the foregoing sentence shall include, without
      limitation, (i) all registration and filing fees (including, without limitation,
      fees and expenses of the Company’s counsel and auditors) (A) with respect to
      filings made with the Commission, (B) with respect to filings required to be
      made with any Trading Market on which the Common Stock is then listed for
      trading, (C) in compliance with applicable state securities or Blue Sky laws
      reasonably agreed to by the Company in writing (including, without limitation,
      fees and disbursements of counsel for the Company in connection with Blue Sky
      qualifications or exemptions of the Registrable Securities) and (D) if not
      previously paid by the Company in connection with an Issuer Filing, with respect
      to any filing that may be required to be made by any broker through which a
      Holder intends to make sales of Registrable Securities with the NASD pursuant
      to
      NASD Rule 2710, so long as the broker is receiving no more than a customary
      brokerage commission in connection with such sale, (ii) printing expenses
      (including, without limitation, expenses of printing certificates for
      Registrable Securities), (iii) messenger, telephone and delivery expenses,
      (iv)
      fees and disbursements of counsel for the Company, (v) Securities Act liability
      insurance, if the Company so desires such insurance, and (vi) fees and expenses
      of all other Persons retained by the Company in connection with the consummation
      of the transactions contemplated by this Agreement.  In addition, the
      Company shall be responsible for all of its internal expenses incurred in
      connection with the consummation of the transactions contemplated by this
      Agreement (including, without limitation, all salaries and expenses of its
      officers and employees performing legal or accounting duties), the expense
      of
      any annual audit and the fees and expenses incurred in connection with the
      listing of the Registrable Securities on any securities exchange as required
      hereunder.  In no event shall the Company be responsible for any
      broker or similar commissions of any Holder or, except to the extent provided
      for in the Transaction Documents, any legal fees or other costs of the
      Holders.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

                    5.                      Indemnification.

    

    (a)  Indemnification
      by the Company. The Company shall, notwithstanding any termination of this
      Agreement, indemnify and hold harmless each Holder, the officers, directors,
      members, partners, agents, brokers (including brokers who offer and sell
      Registrable Securities as principal as a result of a pledge or any failure
      to
      perform under a margin call of Common Stock), investment advisors and employees
      (and any other Persons with a functionally equivalent role of a Person holding
      such titles, notwithstanding a lack of such title or any other title) of each
      of
      them, each Person who controls any such Holder (within the meaning of Section
      15
      of the Securities Act or Section 20 of the Exchange Act) and the officers,
      directors, members, shareholders, partners, agents and employees (and any other
      Persons with a functionally equivalent role of a Person holding such titles,
      notwithstanding a lack of such title or any other title) of each such
      controlling Person, to the fullest extent permitted by applicable law, from
      and
      against any and all losses, claims, damages, liabilities, costs (including,
      without limitation, reasonable attorneys’ fees) and expenses (collectively,
“Losses”), as incurred, arising out of or relating to (1) any untrue or
      alleged untrue statement of a material fact contained in a Registration
      Statement, any Prospectus or any form of prospectus or in any amendment or
      supplement thereto or in any preliminary prospectus, or arising out of or
      relating to any omission or alleged omission of a material fact required to
      be
      stated therein or necessary to make the statements therein (in the case of
      any
      Prospectus or supplement thereto, in light of the circumstances under which
      they
      were made) not misleading or (2) any violation or alleged violation by the
      Company of the Securities Act, the Exchange Act or any state securities law,
      or
      any rule or regulation thereunder, in connection with the performance of its
      obligations under this Agreement, except to the extent, but only to the extent,
      that (i) such untrue statements or omissions are based solely upon information
      regarding such Holder furnished in writing to the Company by such Holder
      expressly for use therein, or to the extent that such information relates to
      such Holder or such Holder’s proposed method of distribution of Registrable
      Securities and was reviewed and expressly approved in writing by such Holder
      or
      its counsel expressly for use in a Registration Statement, such Prospectus
      or in
      any amendment or supplement thereto (it being understood that the Holder has
      approved Annex A hereto for this purpose) or (ii) in the case of an occurrence
      of an event of the type specified in Section 3(d)(iii)-(vi), the use by such
      Holder of an outdated or defective Prospectus after the Company has notified
      such Holder in writing that the Prospectus is outdated or defective and prior
      to
      the receipt by such Holder of the Advice contemplated in Section
      6(d).  The Company shall notify the Holders promptly of the
      institution, threat or assertion of any Proceeding arising from or in connection
      with the transactions contemplated by this Agreement of which the Company is
      aware.

    

    (b)  Indemnification
      by Holders. Each Holder shall, severally and not jointly, indemnify and hold
      harmless the Company, its directors, officers, agents and employees, (and any
      other Persons with a functionally equivalent role of a Person holding such
      titles, notwithstanding a lack of such title or any other title), each Person
      who controls the Company (within the meaning of Section 15 of the Securities
      Act
      and Section 20 of the Exchange Act), and the directors, officers, members,
      shareholders, partners, agents or employees of such controlling Persons, (and
      any other Persons with a functionally equivalent role of a Person holding such
      titles, notwithstanding a lack of such title or any other title) to the fullest
      extent permitted by applicable law, from and against all Losses, as incurred,
      to
      the extent arising out of or based solely upon: (x) such Holder’s failure to
      comply with the prospectus delivery requirements of the Securities Act or (y)
      any untrue or alleged untrue statement of a material fact contained in any
      Registration Statement, any Prospectus, or in any amendment or supplement
      thereto or in any preliminary prospectus, or arising out of or relating to
      any
      omission or alleged omission of a material fact required to be stated therein
      or
      necessary to make the statements therein not misleading (i) to the extent,
      but
      only to the extent, that such untrue statement or omission is contained in
      any
      information so furnished in writing by such Holder or its counsel to the Company
      specifically for inclusion in such Registration Statement or such Prospectus
      or
      (ii) to the extent that such information relates to such Holder’s proposed
      method of distribution of Registrable Securities and was reviewed and expressly
      approved in writing by such Holder expressly for use in a Registration Statement
      (it being understood that the Holder has approved Annex A hereto for this
      purpose), such Prospectus or in any amendment or supplement thereto or (ii)
      in
      the case of an occurrence of an event of the type specified in Section
      3(d)(iii)-(vi), the use by such Holder of an outdated or defective Prospectus
      after the Company has notified such Holder in writing that the Prospectus is
      outdated or defective and prior to the receipt by such Holder of the Advice
      contemplated in Section 6(d). In no event shall the liability of any selling
      Holder hereunder be greater in amount than the dollar amount of the net proceeds
      received by such Holder upon the sale of the Registrable Securities giving
      rise
      to such indemnification obligation.

    

    (c)  Conduct
      of Indemnification Proceedings. If any Proceeding shall be brought or
      asserted against any Person entitled to indemnity hereunder (an “Indemnified
      Party”), such Indemnified Party shall promptly notify the Person from whom
      indemnity is sought (the “Indemnifying Party”) in writing, and the
      Indemnifying Party shall have the right to assume the defense thereof, including
      the employment of counsel reasonably satisfactory to the Indemnified Party
      and
      the payment of all fees and expenses incurred in connection with defense
      thereof; provided, that the failure of any Indemnified Party to give such notice
      shall not relieve the Indemnifying Party of its obligations or liabilities
      pursuant to this Agreement, except (and only) to the extent that it shall be
      finally determined by a court of competent jurisdiction (which determination
      is
      not subject to appeal or further review) that such failure shall have prejudiced
      the Indemnifying Party.

    

                   An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless:  (1) the Indemnifying Party has agreed in writing to pay such
      fees and expenses; (2) the Indemnifying Party shall have failed promptly to
      assume the defense of such Proceeding and to employ counsel reasonably
      satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
      parties to any such Proceeding (including any impleaded parties) include both
      such Indemnified Party and the Indemnifying Party, and counsel to the
      Indemnified Party shall reasonably believe, based on advice of counsel, that
      a
      material conflict of interest is likely to exist if the same counsel were to
      represent such Indemnified Party and the Indemnifying Party (in which case,
      if
      such Indemnified Party notifies the Indemnifying Party in writing that it elects
      to employ separate counsel at the expense of the Indemnifying Party, the
      Indemnifying Party shall not have the right to assume the defense thereof and
      the reasonable fees and expenses of no more than one separate counsel shall
      be
      at the expense of the Indemnifying Party).  The Indemnifying Party
      shall not be liable for any settlement of any such Proceeding effected without
      its written consent, which consent shall not be unreasonably withheld or
      delayed.  No Indemnifying Party shall, without the prior written
      consent of the Indemnified Party, effect any settlement of any pending
      Proceeding in respect of which any Indemnified Party is a party, unless such
      settlement includes an unconditional release of such Indemnified Party from
      all
      liability on claims that are the subject matter of such Proceeding.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

                   Subject
      to the terms of this Agreement, all reasonable fees and expenses of the
      Indemnified Party (including reasonable fees and expenses to the extent incurred
      in connection with investigating or preparing to defend such Proceeding in
      a
      manner not inconsistent with this Section) shall be paid to the Indemnified
      Party, as incurred, within twenty days of written notice thereof to the
      Indemnifying Party; provided, that the Indemnified Party shall promptly
      reimburse the Indemnifying Party for that portion of such fees and expenses
      applicable to such actions for which such Indemnified Party is judicially
      determined to be not entitled to indemnification hereunder.  The
      Indemnified Party shall cooperate fully with the Indemnifying Party in
      connection with any negotiation or defense of any action or claim by the
      Indemnifying Party and shall furnish to the Indemnifying Party all information
      reasonably available to the Indemnified Party which relates to such action
      or
      claim.

    

    (d)  Contribution.
      If the indemnification under Section 5(a) or 5(b) is unavailable to an
      Indemnified Party or insufficient to hold an Indemnified Party harmless for
      any
      Losses, then each Indemnifying Party shall contribute to the amount paid or
      payable by such Indemnified Party, in such proportion as is appropriate to
      reflect the relative fault of the Indemnifying Party and Indemnified Party
      in
      connection with the actions, statements or omissions that resulted in such
      Losses as well as any other relevant equitable considerations. The relative
      fault of such Indemnifying Party and Indemnified Party shall be determined
      by
      reference to, among other things, whether any action in question, including
      any
      untrue or alleged untrue statement of a material fact or omission or alleged
      omission of a material fact, has been taken or made by, or relates to
      information supplied by, such Indemnifying Party or Indemnified Party, and
      the
      parties’ relative intent, knowledge, access to information and opportunity to
      correct or prevent such action, statement or omission.  The amount
      paid or payable by a party as a result of any Losses shall be deemed to include,
      subject to the limitations set forth in this Agreement, any reasonable
      attorneys’ or other fees or expenses incurred by such party in connection with
      any Proceeding to the extent such party would have been indemnified for such
      fees or expenses if the indemnification provided for in this Section was
      available to such party in accordance with its terms.

    

                   The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 5(d) were determined by pro rata allocation or by
      any
      other method of allocation that does not take into account the equitable
      considerations referred to in the immediately preceding
      paragraph.  Notwithstanding the provisions of this Section 5(d), no
      Holder shall be required to contribute, in the aggregate, any amount in excess
      of the amount by which the net proceeds actually received by such Holder from
      the sale of the Registrable Securities subject to the Proceeding exceeds the
      amount of any damages that such Holder has otherwise been required to pay by
      reason of such untrue or alleged untrue statement or omission or alleged
      omission.

    

    The
      indemnity and contribution agreements contained in this Section are in addition
      to any liability that the Indemnifying Parties may have to the Indemnified
      Parties.

    

    No
      Person
      involved in the sale of Registrable Securities who is guilty of fraudulent
      misrepresentation (within the meaning of Section 11(f) of the Securities Act)
      in
      connection with such sale shall be entitled to indemnification from any Person
      involved in such sale of Registrable Securities who is not guilty of fraudulent
      misrepresentation.

    

            6.                 Miscellaneous.

    

    (a)  Remedies.  In
      the event of a breach by the Company or by a Holder of any of their respective
      obligations under this Agreement, each Holder or the Company, as the case may
      be, in addition to being entitled to exercise all rights granted by law and
      under this Agreement, including recovery of damages, shall be entitled to
      specific performance of its rights under this Agreement.  The Company
      and each Holder agree that monetary damages would not provide adequate
      compensation for any losses incurred by reason of a breach by it of any of
      the
      provisions of this Agreement and hereby further agrees that, in the event of
      any
      action for specific performance in respect of such breach, it shall not assert
      or shall waive the defense that a remedy at law would be adequate.

    

    (b)  No
      Piggyback on Registrations; Prohibition on Filing Other Registration
      Statements. Except as set forth on Schedule 6(b) attached hereto,
      neither the Company nor any of its security holders (other than the Holders
      in
      such capacity pursuant hereto) may include securities of the Company in any
      Registration Statements other than the Registrable Securities.  The
      Company shall not file any other registration statements, other than on Form
      S-4
      or Form S-8 (each as promulgated under the Securities Act) or their then
      equivalents relating to equity securities to be issued solely in connection
      with
      any acquisition of any entity or business or equity securities issuable in
      connection with the Company’s stock option or other employee benefit plans,
      until all Registrable Securities are registered pursuant to a Registration
      Statement that is declared effective by the Commission, provided that this
      Section 6(b) shall not prohibit the Company from filing amendments to
      registration statements filed prior to the date of this Agreement, including
      filing new registration statements to register the resale of shares whose resale
      is currently registered on registration statements on Form SB-2.

    

    (c)  Compliance.
      Each Holder covenants and agrees that it will comply with the prospectus
      delivery requirements of the Securities Act as applicable to it in connection
      with sales of Registrable Securities pursuant to a Registration
      Statement.

    

    (d)  Discontinued
      Disposition.  By its acquisition of Registrable Securities, each
      Holder agrees that, upon receipt of a notice from the Company of the occurrence
      of any event of the kind described in Section 3(d)(iii) through (vi), such
      Holder will forthwith discontinue disposition of such Registrable Securities
      under a Registration Statement until it is advised in writing (the
“Advice”) by the Company that the use of the applicable Prospectus (as it
      may have been supplemented or amended) may be resumed.  The Company
      will use its commercially reasonable efforts to ensure that the use of the
      Prospectus may be resumed as promptly as is practicable.  The Company
      agrees and acknowledges that any periods during which the Holder is required
      to
      discontinue the disposition of the Registrable Securities hereunder shall be
      subject to the provisions of Section 2(b).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (e)  Piggy-Back
      Registrations. If, at any time during the Effectiveness Period, there is not
      an effective Registration Statement covering all of the Registrable Securities
      and the Company shall determine to prepare and file with the Commission a
      registration statement relating to an offering for its own account or the
      account of others under the Securities Act of any of its equity securities,
      other than on Form S-4 or Form S-8 (each as promulgated under the Securities
      Act) or their then equivalents relating to equity securities to be issued solely
      in connection with any acquisition of any entity or business or equity
      securities issuable in connection with the Company’s stock option or other
      employee benefit plans, then the Company shall deliver to each Holder a written
      notice of such determination and, if within fifteen days after the date of
      the
      delivery of such notice, any such Holder shall so request in writing, the
      Company shall include in such registration statement all or any part of such
      Registrable Securities such Holder requests to be registered; provided,
however, that the Company shall not be required to register any
      Registrable Securities pursuant to this Section 6(e) that are eligible for
      resale pursuant to Rule 144(k) promulgated by the Commission pursuant to the
      Securities Act (assuming that all Registrable Securities are held by persons
      that are not Affiliates
      of the Company) or that are the subject of a then effective Registration
      Statement.  Notwithstanding anything herein to the
      contrary, the Company shall have the right to postpone or withdraw
      any registration effected pursuant to this Section 6(e) without
      obligation to the Holders.  If, in connection with any underwritten
      public offering for the account of the Company or for stockholders of the
      Company that have contractual rights to require the Company to register shares
      of Common Stock, the managing underwriter(s) thereof shall impose a limitation
      on the number of shares of Common Stock which may be included in a registration
      statement because, in the judgment of such underwriter(s), marketing or other
      factors dictate such limitation is necessary to facilitate such offering, then
      the Company shall be obligated to include in the registration statement only
      such limited portion of the Registrable Securities with respect to which each
      Holder has requested inclusion hereunder as such underwriter(s) shall
      permit.  Any exclusion of Registrable Securities shall be made pro
      rata among the Holders seeking to include Registrable Securities in a
      registration statement, in proportion to the number of Registrable Securities
      sought to be included by such Holders; provided, however, that the
      Company shall not exclude any Registrable Securities unless the Company has
      first excluded all outstanding securities, the holders of which are not entitled
      to inclusion of such securities in the registration statement or are not
      entitled to pro rata inclusion with the Registrable Securities; and
provided, further, that, after giving effect to the immediately
      preceding proviso, any exclusion of Registrable Securities shall be made pro
      rata with holders of other securities having the right to include such
      securities in the registration statement.

    

    (f)  Amendments
      and Waivers. The provisions of this Agreement, including the provisions of
      this sentence, may not be amended, modified or supplemented, and waivers or
      consents to departures from the provisions hereof may not be given, unless
      the
      same shall be in writing and signed by the Company and the Holders of a majority
      of the then outstanding Registrable Securities (including, for this purpose
      any
      Registrable Securities issuable upon exercise or conversion of any
      Security).  If a Registration Statement does not register all of the
      Registrable Securities pursuant to a waiver or amendment done in compliance
      with
      the previous sentence, then the number of Registrable Securities to be
      registered for each Holder shall be reduced pro rata among all Holders and
      each
      Holder shall have the right to designate which of its Registrable Securities
      shall be omitted from such Registration Statement. Notwithstanding the
      foregoing, a waiver or consent to depart from the provisions hereof with respect
      to a matter that relates exclusively to the rights of a Holder or some Holders
      and that does not directly or indirectly affect the rights of other Holders
      may
      be given by such Holder or Holders of all of the Registrable Securities to
      which
      such waiver or consent relates; provided, however, that the
      provisions of this sentence may not be amended, modified, or supplemented except
      in accordance with the provisions of the first  sentence of this
      Section 6(f).

    

    (g)  Notices.
      Any and all notices or other communications or deliveries required or permitted
      to be provided hereunder shall be delivered as set forth in the Purchase
      Agreement.

    

    (h)  Successors
      and Assigns. This Agreement shall inure to the benefit of and be binding
      upon the successors and permitted assigns of each of the parties and shall
      inure
      to the benefit of each Holder. The Company may not assign (except by merger)
      its
      rights or obligations hereunder without the prior written consent of all of
      the
      Holders of the then outstanding Registrable Securities. Each Holder may assign
      their respective rights hereunder in the manner and to the Persons as permitted
      under the Purchase Agreement.

    

    (i)  [INTENTIONALLY
      DELETED]

    

    (j)  Execution
      and Counterparts. This Agreement may be executed in two or more
      counterparts, all of which when taken together shall be considered one and
      the
      same agreement and shall become effective when counterparts have been signed
      by
      each party and delivered to the other party, it being understood that both
      parties need not sign the same counterpart.  In the event that any
      signature is delivered by facsimile transmission or by e-mail delivery of a
      “.pdf” format data file, such signature shall create a valid and binding
      obligation of the party executing (or on whose behalf such signature is
      executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.

    

    (k)  Governing
      Law.  All questions concerning the construction, validity,
      enforcement and interpretation of this Agreement shall be determined in
      accordance with the provisions of the Purchase Agreement.

    

    (l)  Cumulative
      Remedies. The remedies provided herein are cumulative and not exclusive of
      any other remedies provided by law.

    

    (m)  Severability.
      If any term, provision, covenant or restriction of this Agreement is held by
      a
      court of competent jurisdiction to be invalid, illegal, void or unenforceable,
      the remainder of the terms, provisions, covenants and restrictions set forth
      herein shall remain in full force and effect and shall in no way be affected,
      impaired or invalidated, and the parties hereto shall use their commercially
      reasonable efforts to find and employ an alternative means to achieve the same
      or substantially the same result as that contemplated by such term, provision,
      covenant or restriction. It is hereby stipulated and declared to be the
      intention of the parties that they would have executed the remaining terms,
      provisions, covenants and restrictions without including any of such that may
      be
      hereafter declared invalid, illegal, void or unenforceable.

    

    (n)  Headings.
      The headings in this Agreement are for convenience only, do not constitute
      a
      part of the Agreement and shall not be deemed to limit or affect any of the
      provisions hereof.

    

    (o)  Independent
      Nature of Holders’ Obligations and Rights. The obligations of each Holder
      hereunder are several and not joint with the obligations of any other Holder
      hereunder, and no Holder shall be responsible in any way for the performance
      of
      the obligations of any other Holder hereunder. Nothing contained herein or
      in
      any other agreement or document delivered at any closing, and no action taken
      by
      any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders
      as a partnership, an association, a joint venture or any other kind of entity,
      or create a presumption that the Holders are in any way acting in concert with
      respect to such obligations or the transactions contemplated by this Agreement.
      Each Holder shall be entitled to protect and enforce its rights, including
      without limitation the rights arising out of this Agreement, and it shall not
      be
      necessary for any other Holder to be joined as an additional party in any
      proceeding for such purpose.

    

    ********************

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

                   IN
      WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
      as
      of the date first written above.

    

    
      	
              AEROGROW
                INTERNATIONAL, INC.

               

               

            
	
              By:__________________________________________

                   Name:

                   Title:

               

            

    

    

    
[SIGNATURE
      PAGE OF HOLDERS FOLLOWS]

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    

    [SIGNATURE
      PAGE OF HOLDERS TO AERO RRA]

    

    

    Name
      of
      Holder: _________________________________________________

    

    Signature
      of Authorized Signatory of Holder: __________________________

    

    Name
      of
      Authorized Signatory: _____________________________________

    

    Title
      of
      Authorized Signatory: ______________________________________

    

    

    

    [SIGNATURE
      PAGES CONTINUE]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Annex
      A

    Plan
      of Distribution

    

    Each
      Selling Stockholder (the “Selling Stockholders”) of the common stock and
      any of their pledgees, assignees and successors-in-interest may, from time
      to
      time, sell any or all of their shares of common stock on the Nasdaq Capital
      Market or any other stock exchange, market or trading facility on which the
      shares are traded or in private transactions.  These sales may be at
      fixed or negotiated prices.  A Selling Stockholder may use any one or
      more of the following methods when selling shares:

     

    
      	
              ·  

            	
              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;

            

    

     

    
      	
              ·  

            	
              settlement
                of short sales entered into after the effective date of the registration
                statement of which this prospectus is a
                part;

            

    

     

    
      	
              ·  

            	
              broker-dealers
                may agree with the Selling Stockholders to sell a specified number
                of such
                shares at a stipulated price per
                share;

            

    

     

    
      	
              ·  

            	
              through
                the writing or settlement of options or other hedging transactions,
                whether through an options exchange or
                otherwise;

            

    

     

    
      	
              ·  

            	
              a
                combination of any such methods of sale;
                or

            

    

     

    
      	
              ·  

            	
              any
                other method permitted pursuant to applicable
                law.

            

    

     

    The
      Selling Stockholders may also sell shares under Rule 144 under the Securities
      Act of 1933, as amended (the “Securities Act”), if available, rather than
      under this prospectus.

     

    Broker-dealers
      engaged by the Selling Stockholders may arrange for other brokers-dealers to
      participate in sales.  Broker-dealers may receive commissions or
      discounts from the Selling Stockholders (or, if any broker-dealer acts as agent
      for the purchaser of shares, from the purchaser) in amounts to be negotiated,
      but, except as set forth in a supplement to this Prospectus, in the case of
      an
      agency transaction not in excess of a customary brokerage commission in
      compliance with NASDR Rule 2440; and in the case of a principal transaction
      a
      markup or markdown in compliance with NASDR IM-2440.

     

    In
      connection with the sale of the common stock or interests therein, the Selling
      Stockholders may enter into hedging transactions with broker-dealers or other
      financial institutions, which may in turn engage in short sales of the common
      stock in the course of hedging the positions they assume.  The Selling
      Stockholders may also sell shares of the common stock short and deliver these
      securities to close out their short positions, or loan or pledge the common
      stock to broker-dealers that in turn may sell these securities.  The
      Selling Stockholders may also enter into option or other transactions with
      broker-dealers or other financial institutions or the creation of one or more
      derivative securities which require the delivery to such broker-dealer or other
      financial institution of shares offered by this prospectus, which shares such
      broker-dealer or other financial institution may resell pursuant to this
      prospectus (as supplemented or amended to reflect such
      transaction).

     

    The
      Selling Stockholders and any broker-dealers or agents that are involved in
      selling the shares may be deemed to be “underwriters” within the meaning of the
      Securities Act in connection with such sales.  In such event, any
      commissions received by such broker-dealers or agents and any profit on the
      resale of the shares purchased by them may be deemed to be underwriting
      commissions or discounts under the Securities Act.  Each Selling
      Stockholder has informed the Company that it does not have any written or oral
      agreement or understanding, directly or indirectly, with any person to
      distribute the Common Stock. In no event shall any broker-dealer receive fees,
      commissions and markups which, in the aggregate, would exceed eight percent
      (8%).

     

    The
      Company is required to pay certain fees and expenses incurred by the Company
      incident to the registration of the shares.  The Company has agreed to
      indemnify the Selling Stockholders against certain losses, claims, damages
      and
      liabilities, including liabilities under the Securities Act.

     

    Because
      Selling Stockholders may be deemed to be “underwriters” within the meaning of
      the Securities Act, they will be subject to the prospectus delivery requirements
      of the Securities Act including Rule 172 thereunder.  In addition, any
      securities covered by this prospectus which qualify for sale pursuant to Rule
      144 under the Securities Act may be sold under Rule 144 rather than under this
      prospectus.  There is no underwriter or coordinating broker acting in
      connection with the proposed sale of the resale shares by the Selling
      Stockholders.

     

    We
      agreed
      to keep this prospectus effective until the earlier of (i) the date on which
      the
      shares (assuming any Warrants then outstanding are exercised pursuant to the
      cashless exercise provisions thereof) may be resold by the Selling Stockholders
      who are not our "affiliates" as that term is defined in Rule 144 under the
      Securities Act without registration and without regard to any volume limitations
      by reason of Rule 144(k) under the Securities Act or any other rule of similar
      effect or (ii) all of the shares have been sold pursuant to this prospectus
      or
      Rule 144 under the Securities Act or any other rule of similar
      effect.  The resale shares will be sold only through registered or
      licensed brokers or dealers if required under applicable state securities laws.
      In addition, in certain states, the resale shares may not be sold unless they
      have been registered or qualified for sale in the applicable state or an
      exemption from the registration or qualification requirement is available and
      is
      complied with.

     

    Under
      applicable rules and regulations under the Exchange Act, any person engaged
      in
      the distribution of the resale shares may not simultaneously engage in market
      making activities with respect to the common stock for the applicable restricted
      period, as defined in Regulation M, prior to the commencement of the
      distribution.  In addition, the Selling Stockholders will be subject
      to applicable provisions of the Exchange Act and the rules and regulations
      thereunder, including Regulation M, which may limit the timing of purchases
      and
      sales of shares of the common stock by the Selling Stockholders or any other
      person.  We will make copies of this prospectus available to the
      Selling Stockholders and have informed them of the need to deliver a copy of
      this prospectus to each purchaser at or prior to the time of the sale (including
      by compliance with Rule 172 under the Securities Act).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Annex
      B

     

    AEROGROW
      INTERNATIONAL, INC.

     

    Selling
      Securityholder Notice and Questionnaire

     

    The
      undersigned beneficial owner of common stock (the “Registrable
      Securities”) of Aerogrow International, Inc., a Nevada corporation (the
“Company”), understands that the Company has filed or intends to file
      with the Securities and Exchange Commission (the “Commission”) a
      registration statement (the “Registration Statement”) for the
      registration and resale under Rule 415 of the Securities Act of 1933, as amended
      (the “Securities Act”), of the Registrable Securities, in accordance with
      the terms of the Registration Rights Agreement (the “Registration Rights
      Agreement”) to which this document is annexed.  A copy of the
      Registration Rights Agreement is available from the Company upon request at
      the
      address set forth below.  All capitalized terms not otherwise defined
      herein shall have the meanings ascribed thereto in the Registration Rights
      Agreement.

     

    Certain
      legal consequences arise from being named as a selling securityholder in the
      Registration Statement and the related prospectus.  Accordingly,
      holders and beneficial owners of Registrable Securities are advised to consult
      their own securities law counsel regarding the consequences of being named
      or
      not being named as a selling securityholder in the Registration Statement and
      the related prospectus.

     

    NOTICE

     

    The
      undersigned beneficial owner (the “Selling Securityholder”) of
      Registrable Securities hereby elects to include the Registrable Securities
      owned
      by it in the Registration Statement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
      undersigned hereby provides the following information to the Company and
      represents and warrants that such information is accurate:

     

    QUESTIONNAIRE

     

    
      	
               

            	
              1.

            	
              Name.

            

    

     

    
      	
               

            	
              (a)

            	
              Full
                Legal Name of Selling Securityholder

               

              ___________________________________________________________________

            

    

     

    
      	
               

            	
              (b)

            	
              Full
                Legal Name of Registered Holder (if not the same as (a) above) through
                which Registrable Securities are held:

               

              
                ___________________________________________________________________

              

            

    

     

    
      	
               

            	
              (c)

            	
              Full
                Legal Name of Natural Control Person (which means a natural person
                who
                directly or indirectly alone or with others has power to vote or
                dispose
                of the securities covered by this Questionnaire):

               

              
                ___________________________________________________________________

              

            

    

     

    
      
        	
                 

              	
                2.

              	
                Address
                  for Notices to Selling Securityholder:

                 

                
                  ______________________________________________________________________________________________________________________________________

                   

                  
                    ______________________________________________________________________________________________________________________________________

                    
                       

                      Telephone:_____________________________________________________________________________________________________________________________

                       

                      Fax:___________________________________________________________________________________________________________________________________

                       

                      Contact Person:__________________________________________________________________________________________________________________________

                       

                    

                  

                

              

      

       

    

    
      	
               

            	
              3.            
                Broker-Dealer Status:

            

    

     

    
      	
               

            	
              (a)

            	
              Are
                you a broker-dealer?

            

    

     

    Yes  o                       No   o

     

    
      	
               

            	
              (b)

            	
              If
                “yes” to Section 3(a), did you receive your Registrable Securities as
                compensation for investment banking services to the
                Company?

            

    

     

       
Yes 
o                        No   o

     

    
      	
              Note:

            	
              If
                “no” to Section 3(b), the Commission’s staff has indicated that you should
                be identified as an underwriter in the Registration
                Statement.

            

    

     

    
      	
               

            	
              (c)

            	
              Are
                you an affiliate of a
                broker-dealer?

            

    

     

    Yes
 o                        No   o

     

    
      	
               

            	
              (d)

            	
              If
                you are an affiliate of a broker-dealer, do you certify that you
                purchased
                the Registrable Securities in the ordinary course of business, and
                at the
                time of the purchase of the Registrable Securities to be resold,
                you had
                no agreements or understandings, directly or indirectly, with any
                person
                to distribute the Registrable
                Securities?

            

    

     

    Yes  o                       No  
      o

     

    
      	
              Note:

            	
              If
                “no” to Section 3(d), the Commission’s staff has indicated that you should
                be identified as an underwriter in the Registration
                Statement.

            

    

     

    
      	
               

            	
              4.            
                Beneficial Ownership of Securities of the Company Owned by the Selling
                Securityholder.

            

    

     

    Except
      as set forth below in this Item 4, the undersigned is not the beneficial or
      registered owner of any securities of the Company other than the securities
      issuable pursuant to the Purchase Agreement.

     

    
      	
               

            	
              (a)

            	
              Type
                and Amount of other securities beneficially owned by the Selling
                Securityholder:

               

              _______________________________________________________________________

               

              
                _______________________________________________________________________

              

            

    

     

    
      	
               

            	
              5.           
                Relationships with the
                Company:

            

    

     

    Except
      as set forth below, neither the undersigned nor any of its affiliates, officers,
      directors or principal equity holders (owners of 5% of more of the equity
      securities of the undersigned) has held any position or office or has had any
      other material relationship with the Company (or its predecessors or affiliates)
      during the past three years.

     

    
      	
               

            	
              State
                any exceptions here:

               

              
                _______________________________________________________________________

                 

                
                  _______________________________________________________________________

                

              

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    The
      undersigned agrees to promptly notify the Company of any inaccuracies or changes
      in the information provided herein that may occur subsequent to the date hereof
      at any time while the Registration Statement remains effective.

     

    By
      signing below, the undersigned consents to the disclosure of the information
      contained herein in its answers to Items 1 through 5 and the inclusion of such
      information in the Registration Statement and the related prospectus and any amendments or supplements
      thereto.  The undersigned understands that such information
      will be relied upon by the Company in connection with the preparation or
      amendment of the Registration Statement and the related prospectus.

     

    IN
      WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
      and Questionnaire to be executed and delivered either in person or by its duly
      authorized agent.

     

    Date: ______________________                                   Beneficial
      Owner:                                                                         

     

    By:                                                                                                  
      

    Name:

    Title:

    

    PLEASE
      FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
      THE ORIGINAL BY OVERNIGHT MAIL, TO:

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